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What went wrong with California’s budget

Marketplace Contributor Jun 11, 2012

What went wrong with California’s budget

Marketplace Contributor Jun 11, 2012

Jeremy Hobson: Lawmakers in California have until the end of the week to plug a 16 billion dollar budget deficit. That’s a much bigger gap than the $9 billion the Governor estimated just months ago.

Ben Adler of Capital Public Radio in Sacramento explains how the problem got so much worse – so fast.

Ben Adler: The biggest reason for the deficit jump is a whole bunch of money the state planned on getting never showed up. Now, you might think there’s a pretty simple explanation for that.

Montage: It’s the economy, stupid!

But actually, just about everyone agrees — it’s not. First of all, taxes on capital gains and corporations came in way short of projections.

Here’s how Democratic Gov. Jerry Brown explained things a couple of weeks ago.

Jerry Brown: The capitalist system is not coincident with your expectations of exactitude. It doesn’t play like we may want it to.

But the governor and legislative Democrats did project an extra $4 billion in revenue in last year’s budget. From the start, Republicans called it wishful thinking.

Senate Minority Leader Bob Huff.

Bob Huff: There were unrealistic assumptions made last year. Obviously, the most notable was the $4 billion that magically appeared when they were that far apart from closing the budget.

Beyond the revenue, a lot of other things didn’t work out either. Federal judges and the Obama Administration rejected some health and human services cuts. And it turns out schools are owed more than originally thought, thanks to the state’s incredibly complex education funding formula. Here’s Gov. Brown.

Brown: The budget has hundreds of funds. We have lots of restraints and rules and figuring it out is not just showing up and saying, OK, we got an $8 billion gap — let’s start cutting like someone in business. It’s a pretzel palace of incredible complexity.

A palace that now has a gaping hole ripped right through it.

In Sacramento, I’m Ben Adler for Marketplace.

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