California's fiscal crisis explained

Financial Crisis Posted on

Gov. Arnold Schwarzenegger is expected to release two versions of the state budget for the fiscal year that begins July 1. Both will show the state slipping back into the red. Here is a brief explanation of California's current fiscal crisis and a summary of the governor's budget proposal, which will be sent to the Legislature:


THE SHORTFALL:

California faces a $15.4 billion budget deficit in the 2009-10 fiscal year. If voters reject three of the five budget-related measures on next Tuesday's special election ballot, that figure will grow by $6 billion.

A deficit of $21.3 billion would translate to roughly 20 percent of the state's entire general fund. The governor's budget proposals will reflect two scenarios: One in which voters approve the budget-related measures and one in which they do not.

Schwarzenegger and state lawmakers passed a budget package in February that was intended to solve the deficit in the current fiscal year and produce a balanced budget for the one that begins on July 1. The combined deficit was projected to be $42 billion before the governor and lawmakers passed their budget package. They agreed to $15.1 billion in cuts, $12.8 billion in temporary tax increases and $11.4 billion in borrowing.

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