California's budget deficit has risen to $16 billion
California Governor Jerry Brown speaks to reporters as he announces his proposed budget at the California State Capitol on January 10, 2011 in Sacramento, Calif. He is expected to speak today about the state's budget deficit, which has grown significantly since previous counts.
David Brancaccio: Many states have weathered the economic storm of recent years and have closed their budget gaps. That can not be said of California. There's word the state is set to spend a lot more than it will be coming in for the budget year that begins July 1.
Joining us is Kevin Yamamura, state capitol reporter for the Sacramento Bee. Good morning.
Kevin Yamamura: Hi David, thanks for having me.
Brancaccio: So give me a sense -- how deep of a hole does California have here with the budget?
Yamamura: The governor came out on Saturday and said that the deficit had grown from $9.2 billion to $16 billion.
Brancaccio: $16 billion in projected spending, more than the money that could come in?
Yamamura: It's both additional spending and less in revenues than he had expected originally. And this is against a spending plan with about $90 billion a year.
Brancaccio: That's a little better than the hole last year, which was like a $26 billion deficit last year.
Yamamura: Yeah, we started at $26 billion and it got a lot of help from, at that time, a spike in revenues that they hadn't anticipated. So it was kind of the reverse situation a year ago, where the economy was recovering a little faster than they expected, and so that helped them reduce that large $26 billion figure significantly. This time, it went in a reverse direction.
Brancaccio: So, the choices are: cutting the spending or, I suppose, borrowing?
Yamamura: The governor is very out-in-front on his tax initiative, which will be on the ballot for November. That's a huge component of his solution. He wants to ask the voters for higher taxes on sales and on wealthy earners, a raise -- he originally said a raise of about $9 billion, so that would bite into a chunk of that deficit. And the rest would come through spending cuts -- a lot of health and welfare cuts and just cuts in the judiciary and virtually every place that the state funds programs.
Brancaccio: And the governor is set to share full details with the public, what, later today?
Yamamura: He's scheduled to do it at 10 o'clock here at the Capitol. He is also traveling to Southern California this afternoon to do a separate announcement, so we'll see.
Brancaccio: Kevin Yamamura, state capitol reporter for the Sacramento Bee. Thank you so much for doing this.
Yamamura: Thank you.