California's deficit to grow to $28 billion next year

Dec. 8, 2010 | By Julie Small | KPCC
Mercer 12655
David Paul Morris/Getty Images

California Governor-elect Jerry Brown speaks during a news conference at his campaign headquarters on November 3, 2010 in Oakland, California.

California’s Governor-elect Jerry Brown huddled together the state’s top financial minds today to tackle the state’s fiscal crisis. Together Brown said they’d define the depth and breadth of California’s problem.

Governor-Elect Brown told a crowd of hundreds of state and local government officials gathered here that the only way to get a handle on California’s fiscal crisis is to look at it clean and sober. He called on the state's top financial officers for help with that.

The first ugly truth Brown unveiled: California’s budget deficit is going to grow to $28 billion next year. That’s $3 billion more than projected just a month ago. Brown said a change to federal estate tax law was to blame.

State Treasurer Bill Lockyer warned that California’s dependence on borrowing money to plug deficits has spiraled out of control. The state spent nearly $6 billion this year repaying debts – triple what the state spent on debt service four years ago.

Controller John Chiang exposed a similar dependency on cash loans – both from private lenders, and cash the state borrows from other pots of money called “special funds.” Chiang said four years ago those short-term loans comprised just 12 percent of the state’s general fund. Now they make up nearly a third of California’s cash supply.

Brown called on the Legislature and local government to come together to change how California does business. He urged them to consider the full range of solutions to combat California’s deficit problems—and the state’s bad fiscal habits.

Join our community: Like KPCC on Facebook and follow us on Twitter to get updates and talk about the day's news with other fans.

blog comments powered by Disqus