![]() Revenue declines of those magnitudes would quickly consume the state’s seemingly hefty “rainy day” reserves.īudgets no longer require two-thirds legislative votes and Democrats have overwhelming legislative majorities, but that, ironically, is another complicating factor. “Revenue declines relative to the May Revision forecast could reach an additional $100 billion through 2026-27.” “Based on a moderate recession scenario in fiscal year 2023-24, revenues could decrease by $40 billion in 2023-24 alone, largely driven by losses in personal income tax,” the budget declares. The revised budget’s deficit is projected even without a recession, but were there an even modest downturn – which many economists expect, due to the Federal Reserve System’s sharp hikes in interest rates to battle inflation – the state would take a big hit. Not only have revenues become structurally less predictable, but they also have become subject to changes in national and global economies. That volatility is the chief reason for the budget’s projection of a $31.5 billion deficit just 12 months after Newsom declared that the state had a $97 billion surplus and bragged that “No other state in American history has ever experienced a surplus as large as this.” The field of play became immensely larger after voters passed Proposition 13, the iconic property tax limit, in 1978 and the state became the basic financier of schools and a big factor in local government budgets. But that was not the only factor.Īs California’s array of services expanded, so did the number of budget stakeholders seeking larger pieces of the pie or protecting what they had. As Democrats drifted to the left and Republicans to the right, what once was collegial sparring became holy war. ![]() Over time, however, the budget process became a political quagmire, in part because the ideological divisions in the Capitol became more pronounced. Republicans, usually in the minority, would sometimes withhold votes until their demands were met. Budgets took two-thirds votes of both legislative houses so the final product needed bipartisan support. Legislative leaders of both parties huddled, sometimes with the governor, and a final budget emerged. The governor’s budget gnomes could fairly accurately predict how much tax revenue would be generated over the forthcoming fiscal year, particularly since most of it would come from taxes on retail sales, a stable base.Īn initial budget was issued in January and it would be revised in May after the April 15 deadline for personal income taxes provided more specificity. While Budget Brakes declined to provide a specific pricing estimate. As one of their key selling points, their website advertises 15 off any competitor’s written estimate. Their shop hours vary slightly by location, but all are closed on Sunday. Drafting state budgets in California was once a fairly straightforward exercise in fiscal politics. Budget Brakes is a regional automotive repair shop with two locations in the Chattanooga area.
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