The decline sets Sacramento back as next month's deadline for passing a budget approaches. Lawmakers face a deficit of $18.6 billion — about 20% of general fund spending — with no easy options left for addressing it, as they have already cut state services severely and temporarily raised income, sales and vehicle taxes.
"One pillar of the budget solution just got destroyed, and there's nothing that can happen between now and June that can get back the $3 billion," said Stephen Levy, director of the Center for Continuing Study of the California Economy.
The retraction could mean even deeper cuts in government services — schools, healthcare for the poor and services for the elderly. Lawmakers may also be forced to consider more reductions in funds for public universities, as well as tax hikes.
This handy revenue tracker shows that we were down $1 billion vs. last year coming into April, and took in $349 million less than last year during April. How's that recovery treating you? And how about the dopey planners in Sacramento who thought we were going to take in $10 billion in April, which would have been a 37% y/y increase? Where did that pie in the sky come from? Especially, as T-Dub points out, when many of the legislature's accounting gimmicks were to pull revenue forward with increased withholding and estimated taxes, meaning there would naturally be more refunds this year!
Good thing we're handing out $10,000 checks to house buyers, huh?
HT: Balls of Fury