Jul 1, 2009 9:17 pm US/Pacific
How Large Is Calif.'s Deficit? Depends Who You Ask
SACRAMENTO (CBS 5 / AP) ―
The precise size of California's budget deficit has been a moving target since Tuesday, when lawmakers failed to pass stopgap measures to avoid IOUs.
Senate President Pro Tem Darrell Steinberg, a Democrat, warned the state faced as much as $7 billion in lost savings and new costs to a budget deficit that had been estimated at $24.3 billion. Adding the two would bring the deficit to more than $31 billion.
During a news conference hours later, Gov. Arnold Schwarzenegger said the estimated size of California's shortfall grew by $2 billion overnight, after lawmakers failed to pass the savings bills. That would increase the shortfall from $24.3 billion to $26.3 billion.
Why such a big difference between the administration and the leader of the Senate?
Part of the reason deals with how the failure of the cash-saving measures from Tuesday night's legislative session affects the budget in the fiscal year that started Wednesday.
Most of the savings would have come from education funding. Because that money was not cut, far more funding will go to public schools this fiscal year under California's complex school-funding formula.
Nonpartisan Legislative Analyst Mac Taylor said Democrats were correct in saying the state would lose $7 billion in savings by not making the Tuesday night cuts. But he added that only a portion of that should be calculated as part of California's actual deficit.
The governor's office projected the savings lost by not making the education cuts will widen the deficit by $2 billion. His administration suggested some of those education cuts could still be made to achieve savings.
But Taylor said even the administration's number is open to interpretation.
When administration officials discuss the deficit, they tend to include a reserve, or an amount they believe is needed to cover anticipated shortfalls in the months ahead and end the year in the black.
In this case, the governor's $26.3 billion gap includes a $1.1 billion reserve. Taylor doesn't count the reserve when he calculates the state's deficit. His estimate is about $25 billion.
"It's not worth a fight between $25 billion and $26 billion," Taylor said. "It's really way beyond that. ... They know what they have to do and they have much larger issues to deal with."
Whether $25 billion or $26.3 billion, it's a hefty figure, accounting for more than a quarter of California's general fund budget.
(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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