California budget goes 10 whole weeks before collapsing

(By Ed Morrissey, Hot Air) - Over the summer, the most populous state in the US struggled to keep itself from financial collapse after a $26 billion hole opened in California’s budget. Instead of taking the painful but necessary step of steep cuts in spending in order to deal with the shortfall, the legislature cut only as far as their political allies would allow, and then relied on funding gimmicks and budget sleight-of-hand to paper over the rest of the shortfall. To the surprise of no one outside of Sacramento, it has only taken ten weeks for California to flop back into the red:

California Governor Arnold Schwarzenegger will know within a month whether a $1.1 billion drop in revenue collections is part of a growing budget shortfall or an isolated event, his budget spokesman said.

Revenue in the three months ended Sept. 30 was 5.3 percent less than assumed in the $85 billion annual budget, state controller John Chiang reported yesterday. Income tax receipts led the gap, as unemployment reached 12.2 percent in August. …

The latest figures show that California is facing resurgent fiscal strains brought on by the U.S. recession. Since February, Schwarzenegger and lawmakers have cut $32 billion from spending, raised taxes by $12.5 billion and covered $6 billion more with accounting gimmicks and borrowing. Even with those actions, state budget officials predict an additional $38 billion in deficits in the next three fiscal years combined, including $7.4 billion in the year starting July 1.