A Balanced Approach to Fixing California’s Budget Deficit—This Year and Beyond

[courtesy of California Progress Report]

In today’s Democratic weekly radio address Assemblymember John Laird talks about the difficult financial decisions that need to be made by the Legislature and the Governor in light of the state’s growing deficit. Assemblymember Laird, the Chair of the Assembly Budget Committee, says, there is a better, fairer and smarter way to balance the state budget than the Governor’s “cuts only, across the board” approach. In the radio address, Assemblymember Laird says, “Rather than papering over the budget problem for one more year on the backs of school kids, the elderly and the poor, we need a mix of responsible, ongoing budget cuts and practical, ongoing new revenues.”

You may listen in English or Spanish or read the transcript below:

The California state budget is a blueprint for investment in our state and in our future. In the era of Governor Pat Brown in the 1960's, our state invested in roads, water, and higher education - and this investment helped make California the eighth largest economy in the world.

Today California is at a similar crossroads—and decisions taken last week and over the next months will determine whether California will continue playing a similar economic role.

In January, the Governor identified a $14.5 billion gap in a state budget totaling $101 billion. That gap was primarily the result of three things. First, the reduction of the Vehicle License Fee in 2004 and the voter approval of Proposition 1A locked the expenditure that the VLF used to pay for into the constitution—that amount is now $6.1 billion. Second, the debt bonds approved by voters in 2004 will cost the state $3 billion in the current year. And third, the softening of revenues, due primarily to the state housing slump and high energy costs, negatively impacts the budget this year.

This past week the non-partisan Legislative Analyst said the total budget problem has reached $16 billion—up a billion and a half dollars from the Governor's original estimate presented just last month.

The State Assembly has taken the budget challenges very seriously. We held twenty-two budget hearings over a three-week period and worked to craft a bi-partisan emergency budget plan approved last week and signed by the Governor.

That plan cut next year's $16 billion budget problem in half, turned this year's $3 billion budget hole to a positive $1 billion, and fixed the state's cash flow situation for the current year.