Don’t Count on Federal Aid, Says California Budget Analyst

January 13, 2010

In many states, officials who work for the governor prepare revenue estimates and everyone else accepts them as fact. In a few states, Cailfornia included, a separate legislative analyst scrutinizes the governor’s revenue estimates to see how realistic they are.

Yesterday, California Legislative Analyst Mac Taylor warned that the state should not count $6.9 billion in federal windfall aid that Gov. Schwarzenegger included:

Taylor estimated that California will receive only $3 billion in new aid for 2010-11, less than half of what Schwarzenegger assumes.

As state leaders prepare for a Washington lobbying trip next week, Taylor said California should ask for federal help. But assuming too much federal aid will only push the state’s fiscal problems into future months.

Taylor warned the Legislature that it should use more realistic assumptions than the governor’s when approaching the current budget problem. In the last two years, lawmakers passed “balanced” budgets that included legally risky maneuvers and false assumptions, some of which have contributed to the current deficit.

“Ultimately, a balanced budget is whatever you get the votes for,” Taylor said. “If you had an assumption of $7 billion in federal funds, it’s possible the Legislature could balance that and pass that budget. The question is, if that wasn’t reasonable, it just means we’ve shifted problems to (next year).”

Well said; the rest of the article is here. California’s revenues and expenditures have been billions of dollars out of balance for a decade. The state’s tax-the-rich system enabled voters to expand services while making someone else pay, but those payers are increasingly voting with their feet. Pushing for more federal aid just puts off hard decisions about taxes and spending.

More on California here.

Was this page helpful to you?


Thank You!

The Tax Foundation works hard to provide insightful tax policy analysis. Our work depends on support from members of the public like you. Would you consider contributing to our work?

Contribute to the Tax Foundation

Related Articles