State Budget Deficit Projected at $5.5B for 2007

Legislative Analyst Elizabeth Hill on Wednesday said in a report that the state will face a $5.5 billion budget deficit for the 2007-2008 fiscal year beginning July 1, 2007, the Los Angeles Times reports. Hill said that the state must cut about $2 billion from the budget without increasing spending on current programs or creating new programs (Halper, Los Angeles Times, 11/16).

The report does not take into account liabilities for state retirees health care and pension benefits, a figure that could amount to billions of dollars.

Gov. Arnold Schwarzenegger (R) said that he plans to unveil a health care reform plan in January 2007, a proposal that the Sacramento Bee reports "could incur at least some new government costs." Schwarzenegger during the campaign said he would not raise taxes (Benson, Sacramento Bee, 11/16).

Instead, Schwarzenegger said that money for new programs would be derived from state revenue and strong economic growth.

In addition, Medianews/Contra Costa Times reports that health care and other programs in California could receive additional federal funding because the state's Congressional delegation "has more clout" after the Nov. 7 election (Folmar, Medianews/Contra Costa Times, 11/16).

Schwarzenegger's staff said that the governor would wait until more economic data becomes available before finalizing his budget proposal in January (Sacramento Bee, 11/16).

Headlines and links of other coverage on the report are provided below.

• "State Analyst Sees Healthier Budget" (Herdt, Ventura County Star, 11/16);
  
• "$5.5 Billion Budget Shortfall Projected by Fiscal Watchdog" (San Diego Union-Tribune, 11/16).