Sacramento - Senator Bill Emmerson, a hemet Republican, revealed June 29 that the state budget signed by Gov. Jerry Brown on June 27 that the governor and legislative Democrats claim will “be balanced on an ongoing basis” is already starting to unravel.
(The governor’s) Department of Finance notified the Legislature that the budget’s nearly $1 billion reserve will be at least $122 million lower than expected as a result of property tax revenues captured from redevelopment agencies coming in lower than expected. The Legislative Analyst’s Office previously cautioned that (the governor’s) budget assumptions regarding property tax revenues from redevelopment agencies are likely overstated by $900 million.
“I’m not surprised that the ink of the governor’s signature isn’t even dry and this budget is unraveling before our eyes,” Emmerson said. “As I’ve said repeatedly, this budget is 90 percent gimmicks and includes the same type of unrealistic assumptions that resulted in a massive state budget deficit in the current fiscal year.”
Further, the current budget plan now assumes California will receive revenue from the estate tax – a change fromthe assumption in the governor’s revised budget released in May that these revenues would not be available. The analyst previously advised the Legislature “to assume no such revenues during its 2012-13 budget process unless there is a clear indication from Congress that a state death tax credit will be adopted,” which would allow for the resumption of the state-level estate tax.
There is no such indication from Congress at this time.
If the estate tax revenues do not materialize, the governor’s budget forecast will fall apart and state operating deficits would be at least $262 million in the next fiscal year, $584 million the following year and $830 million in the fiscal year ending June 30, 2016.