California’s new budget. Pretend and extend

Jerry Brown promised no gimmicks or bogus accounting on the budget. Instead, that’s precisely what California got.

From my latest on CAIVN.

Apparently, $4 billion in unexpected new revenue for the State of California materialized out of thin air right in time to be counted for the budget that just passed. But Gov. Brown and the Democrats didn’t get the sales tax extension that they wanted, so sales tax will drop one percentage point and car registrations one-half of a point on July 1.

More than a few outside observers think the $4 billion increase in expected revenue is unrealistic, especially considering that the economy is stagnant. The California legislature does indeed have a long and tiresome history of making overly optimistic revenue estimates only to have them shattered by the cold, cruel hammer of reality. Maybe this time will be different, based on historical precedent, it probably won’t.

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