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LAO Warns of New Budget Crisis

The LAO has published a report projecting a new budget shortfall of $20.7 billion for the 2010-2011 budget. They say that:

Our forecast of California’s General Fund revenues and expenditures shows that the state must address a General Fund budget problem of $20.7 billion between now and the time the Legislature enacts a 2010–11 state budget plan. The budget problem consists of a $6.3 billion projected deficit for 2009–10 and a $14.4 billion gap between projected revenues and spending in 2010–11. Addressing this large shortfall will require painful choices—on top of the difficult choices the Legislature made earlier this year.

Here is a video of Mac Taylor explaining the results:

Here is the Reuters story:

OAKLAND, Calif., Nov 17 (Reuters) – California faces a budget gap of nearly $21 billion over its current and next fiscal years, according to the state government’s budget watchdog agency, the Los Angeles Times reported on Tuesday.

The newspaper said California’s Legislative Analyst’s Office would issue an official report on Wednesday with its shortfall estimate.

The projection comes less than four months after Governor Arnold Schwarzenegger and lawmakers agreed to a budget plan that closed a deficit of more than $24 billion largely with deep spending cuts to respond to plunging revenues amid the worst economic crisis to hit the most populous U.S. state since the Great Depression.

Schwarzenegger said last week he expects a budget gap for the rest of the current fiscal year of between $5 billion to $7 billion. His finance advisors had previously said the state government would see a $7.4 billion gap in the next fiscal year beginning in July.

But next year’s budget shortfall will be much larger than initially forecast, the Los Angeles Times said. Citing sources briefed the upcoming report, it said the deficit will be $14.4 billion.

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