Reduction in Estimated Tax Revenue, Bush Budget May ‘Compound’ State Budget Shortfall

California's "preliminary January tax collections" have dropped between $600 million and $1.3 billion from earlier estimates, according to new forecasts that state officials released Tuesday, the Los Angeles Times reports. In addition, President Bush's proposed fiscal year 2003 budget may "compound" problems for the "already-strained state budget," which faces a $12 billion deficit. Gov. Gray Davis (D) last month unveiled his proposed $100 billion fiscal year 2002-2003 budget, which "relies on a increase" of about $1 billion in federal funds. State Controller Kathleen Connell and Elizabeth Hill, the state's legislative analyst, have called the $1 billion assumption "overly optimistic" (Tamaki, Los Angeles Times, 2/6). For example, Davis has sought $350 million from the federal government to cover anti-terrorism costs, including funds to improve the state's bioterrorism preparedness (Sherman, AP/Long Beach Press-Telegram, 2/5). Bush has requested $38 billion for homeland defense, including $11 billion over two years for bioterrorism preparedness (California Healthline, 2/4). Davis spokesperson Hilary McLean said that the state expects to receive a "healthy portion" of the funds (AP/Long Beach Press-Telegram, 2/5). She described Bush's budget as a "mixed bag" for the state, "meeting Davis' expectations in some categories and falling short in others" (Whitney/Doyle, Sacramento Bee, 2/5).

Meanwhile, several Democratic California lawmakers "blasted" Bush's proposed budget. Rep. Ellen Tauscher (D) criticized a proposed $9 billion reduction in Medicaid reimbursements for public hospitals over the next five years (Fischer, Contra Costa Times, 2/5). Rep. Pete Stark (D) said that health receives "rhetorical mention in this budget, but not meaningful funding" (Oakland Tribune, 2/5). But some of the state's Republican congressional delegation disagreed with the criticism. Rep. Doug Ose (R) said, "Bush's support for priorities, including health care, prescription drugs, education, the environment, agriculture and retirement security also show he's in touch with the issues American families face" (Sacramento Bee, 2/5).