Credit Markets, Prison Health Care Pose New Budget Obstacles
Gov. Arnold Schwarzenegger (R) and legislative leaders met yesterday to discuss short-term financing options amid the disclosure of state revenue dropping below expectations, the Sacramento Bee reports.
Department of Finance Director Mike Genest confirmed that state revenue for fiscal year 2008-2009 is projected to be about $3 billion below projections used in the budget agreement that the Legislature and Schwarzenegger approved last month (Yamamura, Sacramento Bee, 10/9).
About 15 states are reporting similar mid-year budget gaps (Archibold, New York Times, 10/9).
A document from the state treasurer's office indicates that a potential court order to spend an additional $300 million on prison medical care in the current fiscal year could result in a deficit of about $4.6 billion.Â The document projects that state revenue ultimately could be about $4.3 billion below expectations.
Finance Department spokesperson H.D. Palmer described the projections as a "worst-case scenario."
According to the Bee, the Legislature likely would have to convene a special session on the budget if another gap emerges in the current state budget (Sacramento Bee, 10/9).
Last week, outgoing Senate President Pro Tempore Don Perata (D-Oakland) warned that more cuts to health care and education could be proposed to deal with the budget deficits.Â He said, "The options are all bad," adding, "I am not very optimistic we will get a tax increase" (York, Capitol Weekly, 10/7).
California plans to seek $4 billion in short-term financing next week and will seek another $3 billion in borrowing at a later date, according to Tom Dresslar, a spokesperson for the state treasurer's office.California often seeks such short-term loans, and this year's effort is not related to the diminished revenue projections, according to the Bee (Sacramento Bee, 10/9). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.