Manic delusions of new revenue followed by the wet, cold fish of revenue shortfall. The California budget tragi-comedy continues. I could write articles about the ongoing California budget crisis by using cut-and-paste from previous articles because the same thing happens every year.
Here’s the scenario.
1) California faces an imminent budget crisis because, by law, a balanced budget must pass. But the money isn’t there. There is much gnashing of teeth.
2) The California State Legislature calls upon soothsayers, oracles, and other prognosticators who predict great new revenue streams coming into the state from heretofore unknown sources. There is great rejoicing in Sacramento as these new numbers show that the budget will indeed be balanced. The budget passes using the new revenue estimates.
3) The unthinkable happens. The pixie dust revenue fairy did not swoop in, sprinkling billions of dollars upon the state. Revenue estimates were not only way too high, instead there is – and no one could have predicted this – a gaping revenue shortfall and a new California budget crisis.
4) Repeat 1)-3) endlessly.
California State Controller John Chiang just announced that total State revenue for the month of November 2012 fell $806.8 million, or 10.8%, below budget. Democrats thought they could hammer “the rich” by convincing voters to pass Proposition 30 to create the highest state income tax in the nation. But it now appears that high income earners have already “voted-with-their-feet” by moving themselves and their businesses out of state, resulting in over $1 billion shortfall in corporate and income taxes last month and the beginning of a new financial crisis.