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HomeMy WebLinkAbout2008/10/07 Additional Information . CAPITOL WEEKLyra~~-L :m: IHt: NfWSPA1'I:R O~. ~:~lll{)ANI.~ (iOvEAff,\lt:Nl Atl() 1"Ol,ltl(;,\ Perata says state may face 'another $15 billion to $18 billion deficit' By Anthon\' York (published Tuesday. Oc{oher 07. 2{)()S) Gov. Arnold Schwarzencgger willmcet with legislative leaders Wednesday to try to find ways to till an immediate hole in this year's budget that could be as large as $5 billion, according to estimates from Senate Leader Don Perata, D-Oakland. Pcrata said the detieit could swell to $15 billion or more by the middle of next year. The bleak outlook comes amid a weakening state economy and an unprecedented meltdown on Wall Street, which has pinched corporate and municipal credit. "The options arc all bad," Perata said Wednesday. "I am not very optimistic we will gct a tax increase," which means there could be more cuts to state health services and education, he added. The talk is also sure to revive some "revenue acceleration" options that were rejected by Democrats in the round of budget talks that wrapped up less than three weeks ago. But legislative sources in both parties said discussion of accelerating collection on individual taxpayers' withholding payments would not be on the table. ;;;;lfDemocrats think this reopens the door to tax increases, they~rc wrong," said Jennifer McDaniel, a spokeswoman for Assembly Republican Leader Mike Villines, R-Clovis. While she did not say whether or not her boss supports reconvening the Legislature in a special session, she did say time is of the essence. "The longer we wait, the more opportunitics are missed for savings" through spending ClIts, she said. The shortfall in state budget revenues stems from the weakening economy, both in the state and nationally, in the wake of a persistent housing slump and general economic slowdown. The gap is also attributable to overly optimistic revenue projections made by state budget makers. And Perata said the outlook for next year is even worse. "I think we're heading into another year of $15 billion to $18 billion deficits," he said, looking ahead to the 2009-10 budget year, which begins next July I. While the state wrestles with lower than expected income into state eotfers, it is also being hit by the Wall Street credit crunch. Last wcek, Gov. Sehwarzenegger sent a letter to Treasury Sccrctary Henry Paulson warning the state may necd assistance securing $7 billion in sholi-term loans to cover operating expenses. State treasurer Bill Lockyer said the state could run out of moncy by the end of month if it docs not secure some form of sholi-term loan. Sehwarzenegger spokesman Aaron McLear said these typcs of short-term loans arc commonplace, and that the state routinely relies on bridge loans to ovcrcome the uneven cycle of statc payments and income flow. "These types of revenue anticipation loans are very common," he said. "Sut we may not be able to secure it through Wall Street," because of the virtual credit ti'eeze, he said. Sen. Dean Florez, D-Shafter, sent a letter to Lockyer this week, suggesting the state look beyond the federal government for help with the short-term cash crisis. "The state should look to one of the world's largest investors, thc California Public Employee Retirement System, as a reasonable purchaser of short-term California state debt," he wrote. That idea was rejected by Perata, who said he does not support effectively borrowing against state employee pensions. "I wouldn't want to do that," said Perata. '''Public employees right now are feeling a lot ofpain.~' The reconvening orthe Big 5 to wrestle with budget issues comes just weeks after Rcpublican Gov. Arnold Schwarzenegger and legislative leaders tinally agreed to a 2008-09 budget, the most overdue spending plan in the state's history. Now, the governor and the four leaders of the Legislature - Senate Leader Don Perata and Assembly Speaker Karen Bass, both Democrats; and Senate Gal' Leader Dave Cogdill and Assembly Republican Leader Mike Villines - arc poised to meet Wednesday anernoon to talk options. McLear said representatives from the Department of Finance and the state treasurer's office would also be at the 2 p.m. meeting Wednesday.