http://news.firedoglake.com/2011/11/16/california-faces-13-billion-budget-deficit-next-year-as-state-fiscal-crisis-continues/
California Faces $13 Billion Budget Deficit Next Year, as State Fiscal Crisis Continues<http://news.firedoglake.com/2011/11/16/california-faces-13-billion-budget-deficit-next-year-as-state-fiscal-crisis-continues/> By: David Dayen <http://news.firedoglake.com/author/dday/> Wednesday November 16, 2011 11:33 am [image: Tweet]Tweet<http://news.firedoglake.com/2011/11/16/california-faces-13-billion-budget-deficit-next-year-as-state-fiscal-crisis-continues/#> [image: digg]<http://digg.com/submit?phase=2&url=http://fdl.me/uk4fwX&title=California+Faces+%2413+Billion+Budget+Deficit+Next+Year%2C+as+State+Fiscal+Crisis+Continues> [image: stumbleupon]<http://www.stumbleupon.com/submit?url=http://fdl.me/uk4fwX&title=California+Faces+%2413+Billion+Budget+Deficit+Next+Year%2C+as+State+Fiscal+Crisis+Continues> <http://news.firedoglake.com/?p=24628&akst_action=share-this> If you look at the economic statistics, what should cause the most worry for policymakers is the troubling bifurcation between private sector and public sector jobs. The private sector hasnt created jobs at a spectacular or even a good pace, but theyve seen modest, sustained growth for 20 straight months<http://www.kansascity.com/2011/11/05/3247351/october-job-grew-slightly-in-the.html>. By contrast, the public sector has hemorrhaged jobs. Over the past two years, over 570,000 state, local and federal government jobs have been lost. If the public sector was growing at the same pace as it was in 2009, there would be 2 million more Americans at work<http://thinkprogress.org/economy/2011/10/07/338946/public-sector-jobs-plan/>and the unemployment rate would be around 8%. Clearly, the proper move for the economy is to bolster the public sector with state fiscal aid, increasing consumer demand and directly creating jobs. But none of that is happening. Senate Republicans blocked a state fiscal aid bill that was part of the American Jobs Act. Were going to see a continued negative consequence from that decision. California just announced its latest fiscal figures for next year, and they show a $13 billion deficit<http://blogs.sacbee.com/capitolalertlatest/2011/11/legislative-analyst-2-billion-of-mid-year-cuts.html>starting in July. Whats more, because tax receipts for the current year have been softer than anticipated, some immediate cuts, particularly to schools, could ensue: California would impose $2 billion in mid-year trigger cuts next month, mostly through K-12 school reductions, under a new revenue forecast issued this morning by the nonpartisan Legislative Analysts Office. The LAO also said the deficit for the year beginning July 1, 2012 would be nearly $13 billion. The analysts report is not the sole determinant of whether the state will impose those cuts, but it is one of two tools the Department of Finance must rely upon before deciding whether to slash spending. The finance department will issue its own forecast in December. The Analyst said the state will not receive $3.7 billion of the $4 billion revenue bump that Gov. Jerry Brown and lawmakers optimistically relied upon to help close the budget in June. The enacted budget projected the state would receive $88.5 billion in revenues and transfers; the analyst says it will only get $84.8 billion. Some of this was expected, because to get out of last years budget debacle, the state projected revenues above where they had any right to expect them. A $13 billion deficit, in a state with a balanced budget requirement, would mean that $13 billion will have to be taken out of demand next year, in the form of tax increases or spending cuts (and its California, with its absurd 2/3 requirement for taxes, so the answer is itll be cuts). And thats close to 13 times the impact, from a macro-economic standpoint, of the veterans hiring initiative, one of the only parts of the American Jobs Act that will pass. That is projected to cost a little over $1 billion, all told. There are a lot of areas of attack with the economy. But state fiscal aid, just based on the statistics everyone knows, should be the big one. Instead, the plan is to do nothing, and further this depression in the public sector. Those kids on California university campuses should prepare for another round of protests<http://www.latimes.com/news/local/la-me-college-occupy-20111116,0,2175355.story>, because theyre going to see another round of cuts. 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