Increased State Revenue Could Eliminate Need for Budget Cuts in FY 2006-2007; Implications Seen for Health Care Proposals
The state could have $5.2 billion in extra revenue at the end of this fiscal year in June, meaning no new program cuts or tax increases would be needed to balance the state budget, according to the Legislative Analyst's Office, the San Jose Mercury News reports (Davis, San Jose Mercury News, 11/17).
Legislative Analyst Elizabeth Hill said the expected surplus would cover a projected $4 billion budget shortfall next fiscal year and leave a reserve of $1.2 billion. The surplus was fueled by spending cuts in the current budget and a higher-than-expected increase in tax revenue (Chorneau, Associated Press, 11/17).
However, Hill warned that without significant program cuts or tax increases in the future, spending will outpace revenue by billions of dollars by FY 2007-2008 (Halper, Los Angeles Times, 11/17).
Gov. Arnold Schwarzenegger (R) has not said how the extra money would be spent but has said he will work with lawmakers on several issues, including possibly expanding children's health care (Gledhill, San Francisco Chronicle, 11/17). Assembly member Wilma Chan (D-Oakland) this week suggested financing a children's health insurance plan in California with one-time tax amnesty money the state received this year (Kim Quach/Galvin, Orange County Register, 11/17).
Other children's advocacy groups are considering a ballot initiative to increase the state's tobacco tax to fund new public health programs. Polls show voters support such taxes, prompting lawmakers to consider introducing legislation to increase the tax. Legislation would allow lawmakers to maintain control over tax money, rather than create new programs some Republicans say the state cannot afford, the Times reports (Los Angeles Times, 11/17).
Hill recommended that any additional spending should be accompanied by equal spending cuts or additional revenue.
Schwarzenegger's state budget proposal will be released in January (Benson, Sacramento Bee, 11/17).