Davis Budget Proposal Could Cause $4B Deficit, Analyst Says
Gov. Gray Davis' (D) budget proposal is "overly optimistic" and could result in a $4 billion operating deficit in the 2003-04 fiscal year, according to the state's independent legislative analyst, the Los Angeles Times reports. Elizabeth Hill yesterday "warned" legislators that Davis' proposal "relies heavily on one-time solutions and pushes a variety of expenses into the future." According to Hill's analysis, Davis' budget plan "not only fails to eliminate the threat of future deficits, it could also make them worse" (Tamaki, Los Angeles Times, 1/16). Davis' budget, which he must balance under state law, includes a "combination of cutbacks, deferred spending, internal borrowing and accelerated revenue" but does not increase taxes, the governor said in his Jan. 8 State of the State address (California Healthline, 1/9). Hill predicted that state revenue will be $3 billion "or more" below what Davis anticipated in his spending plan. Timothy Gage, the state's director of finance, said Hill's estimate of a $3 billion revenue shortfall "sounds too high." However, Gage said, "If revenues are such that they won't bridge the gap in (2003-04), obviously we'll look at additional solutions. It's a balancing act. Do you go in and devastate programs based on a forecast on revenues two years out?" Senate Budget Committee Chair Steve Peace also defended Davis' proposal. Peace said, "[T]he alternative, raising taxes, would delay the state's economic recovery," and "deeper budget cuts would wind up costing the state more money" in the future (Los Angeles Times, 1/16). For the health care sector, Davis' budget -- released Thursday -- makes "substantial" cuts to some programs, including Medi-Cal, but slightly increases spending on health services overall (California Healthline, 1/11).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.