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Our View: New budget leaves state in trouble

Posted: July 1, 2011 1:55 a.m.
Updated: July 1, 2011 1:55 a.m.

A new state budget was signed Thursday by Gov. Jerry Brown.

And considering that last year’s was signed in the middle of October, a very light pat on the back is in order for our California lawmakers, if only for showing so much improvement by only missing the June 15 deadline by about two weeks. But that’s about all they deserve credit for.

Our new budget is, well, not good.

It’s largely relying on an expected growth of about $4 billion in revenue to keep the state in the black until this time next year. Though the economy is showing some signs of improvement, to expect $4 billion to come rushing in is more than optimistic.

And that’s also due in part to the passing of the “Amazon Tax,” which states that Amazon — and other online retailers — pay sales tax even if they have no physical presence in the state by using the logic that independent California-based affiliates promoting Amazon are essentially an extension of the company itself.

This, in turn, led to Amazon immediately pulling the plug on its California affiliates.

So, while our lawmakers expected the tax to bring in hundreds of millions of dollars to balance the budget, that number has been slightly reduced — to just about zero.

In other words: After less than a week of being official, the budget is already in the red.

Besides unrealistic revenue expectations, there has still been no progress made on pension reform and other structural issues, which are multibillion-dollar drains on the state.

Lawmakers are also balancing the budget on the backs of local government again by scrapping redevelopment agencies and then essentially extorting money from cities in a pay-to-play scheme if they want to keep their agencies.

And, to add further hardship on California residents, hundreds of millions are being cut from the U.C. and Cal State university systems.

While we’ve avoided the collateral damage and another round of IOUs from a multimonth delay in signing a new budget, with so many holes, cuts and bold assumptions, there isn’t a whole lot to like about it.

Though this may be a pessimistic view, the budget seems like it might have been hastily put together because lawmakers just wanted to get paid before the mortgage was due.

All we know for sure is that this budget has holes bigger than the one that sank the Titanic, but we’ll just have to do our best to stay afloat until next summer.


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