While I had been expecting that California would see a state revenue shortfall in 2008 of around $8-billion (up ten-fold from this year), Governor Schwarzenegger announced today that the situation will be even even more dire. Fueled largely by housing’s collapse, the California state budget is now forecast to have a $10-billion shortfall in the coming fiscal year.
Gov. Arnold Schwarzenegger on Monday ordered all state departments to draft plans for deep spending cuts after receiving word that California’s budget is plunging further into the red — largely because of the troubled housing market.
State officials have warned the governor that the likely deficit for next year has jumped from a few billion dollars to as much as $10 billion, threatening to wipe out the progress Schwarzenegger has claimed in getting the state’s accounts in order.
In response, Schwarzenegger’s finance department has ordered agency directors to formulate plans to cut budgets by 10% for the spending blueprint the governor will unveil in January, according to administration officials who spoke on condition of anonymity. That would mean substantial cuts in all state programs, including education, transportation and healthcare, the officials said.
I know, I know, state budget finance calculations are only one step removed from astrology, but this is still serious stuff, and the consequences will be painful.
[via L.A. Times]