[courtesy of California Progress Report]

By Frank D. Russo

Burning the midnight oil since the release on Wednesday of Governor Schwarzenegger’s proposed “May Revision” of the California budget, the Legislative Analyst’s Office has released just hours ago a 30 plus page report that has good and bad news in it for the Governor. Elizabeth Hill, the analyst who is often referred to as “the budget nun,” is now testifying before the legislature on her report and taking questions.

There’s a lot here, but the bottom line is that the LAO agrees pretty closely with the revenue estimates and expenditure estimates used by the Governor. She says that the Governor’s proposed lottery securitization and sale tax trigger presents “significant risk” and debt and proposes a “slimmed down and more responsible lottery plan” of her own that she says is much less risky for education. She criticizes the Governor’s long term budget reform proposal as locking in the shortfall, threatening legislative authority, and complicating the budget.

[courtesy of California Progress Report]

By Mark Paul
Senior Scholar
New America Foundation

Like generals who are always fighting the last war, California's pundits are still fighting their way out of the last budget crisis. Latest case in point: George Skelton of the Los Angeles Times, who recently complained again that California's income tax "depends too heavily on the wealthy." In Skelton's world, the wealthy are just like those men mothers always warn their daughters about: they'll show you a good time, and then disappear, leaving you heartbroken. "Their incomes rise and fall steeply with the economy," he writes, "and therefore so do state budget deficits."

Except that's not why California has a budget crisis. As the state controller reported on May 9, personal income tax collections for the first nine months of the current budget year are $1.4 billion over the estimate in Gov. Schwarzenegger's January budget and within a whisker of the amount budgeted last summer. Through the first nine months California revenues are up 1.2 percent over a year ago, thanks entirely to the income tax, which has more than made up for the decline in sales tax revenues caused by the housing crash.

by Brian Leubitz [courtesy of Calitics - Front Page]