The tale of the disappearing billions

Remember the hopeful news we were getting during the first few months of the year about rising state revenues? Well, the LA Times now reports that those gains have been completely wiped out when April revenue fell $3B short of expectations. Nobody really knows why: it might be that when the Legislature reached a budget deal last year they sped up collections in an effort to bring in more of that revenue in 2009; or it might be that with unemployment at a staggering 12.6% and furloughs of public employees people just don't have as much taxable (or expendable) income.

Be that as it may, the Governor and the Legislature now face an almost impossible task. According to the LA Times,

The retraction could mean even deeper cuts in government services — schools, healthcare for the poor and services for the elderly. Lawmakers may also be forced to consider more reductions in funds for public universities, as well as tax hikes.

Which will of course drive the State into an even deeper economic funk.  The Governor had been making noises lately about restoring (at least in part) funding for UC and CSU. We are not optimistic about that happening any time soon, which might well mean extended furloughs, layoffs, and even deeper cuts for the University.

The Governor's revised budget is due out on May 14. Brace yourselves.