A perfect storm of economic, fiscal and political trends is battering California’s already deficit-ridden state budget, leading public employee unions and other interest groups dependent on money from Sacramento to explore hefty tax increases.
The budget has what fiscal authorities call a “structural deficit,” meaning that its revenue system, dominated by personal income taxes, cannot generate enough income to fully finance all services and programs in current law.
Estimates of the chronic shortfall range from $10 billion a year to as much as $30 billion. Last fall, the Legislative Analyst’s Office calculated that state spending was increasing by about 6% a year while revenue was rising by only 4%.
The current budget, enacted in June, had a $20 billion deficit that was closed by tapping