California's budget goes from red to black

California Gov. Jerry Brown discusses pension reform during a news conference on August 28, 2012 in Los Angeles, California.

According to California Governor Jerry Brown, the state will earn more in revenue than it spends this fiscal year. That may come as a surprise to anyone who follows the state's budget. It had a $9 billion deficit last year, and $25 billion the year before. How'd he do it? Massive spending cuts for one, says Brown:

"25 percent out of the colleges and universities, we cut healthcare, aid to the blind and disabled, we got rid of redevelopment, you name it."

Combined with increased taxes, on income and sales.

Alan Schankel, director of municipal strategy at Janney Capital Markets, says California’s expected surplus, about $850 million, isn't that big compared to the overall budget. And at the end of the fiscal year, the state could still come up short -- California's revenue is less predictable than other states' because it relies heavily on income tax.

"A blip in the economy can have a disproportionate impact on revenues because it's so dependent on high earners," says Schankel.

California has lots of wealthy residents, but if they have an off year, the state budget suffers.

About the author

Eve Troeh is News Director at WWNO-FM in New Orleans, La., helping build the first public radio news department in the station’s 40-year history. She reported for the Marketplace Sustainability Desk from 2010 to 2013.


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