Expected State Budget Shortfall Could Hamper Schwarzenegger Agenda
On Monday, Gov. Arnold Schwarzenegger (R) directed state agency leaders to slash spending by 10% in their spending plans for fiscal year 2008-2009, a move that political analysts say could deal a setback to his health care reform proposal, the Los Angeles Times reports.
State revenue is coming in below projections, in large part because of the decline in the housing market and related drops in state income tax revenue. California's budget deficit for the upcoming fiscal year could be as high as $10 billion.
Administration officials speaking on condition of anonymity told the Times that the finance department has ordered the 10% spending cuts as department officials prepare the governor's budget proposal that he will release in January 2008.
Adam Mendelsohn, a spokesperson for the governor, declined to answer questions about the order but said that budget talks were ongoing. Responding to speculation that the spending cuts could derail the governor's goals for health care and water, Mendelsohn said that California needed to proceed, regardless of the budget situation because inaction on health care and water would hurt the state economy (Halper, Los Angeles Times, 11/6).