Analyst says plan would widen future budget gaps..(California)

http://www.signonsandiego.com/news/state/20040518-9999-1n18budget.html

Analyst says plan would widen future budget gaps



By Ed Mendel
UNION-TRIBUNE STAFF WRITER
May 18, 2004

SACRAMENTO – The nonpartisan legislative analyst yesterday gave a thumbs-down to Gov. Arnold Schwarzenegger's revised $102.8 billion state budget plan, saying it would widen future budget gaps even with an improving economy.


The view of Legislative Analyst Liz Hill, regarded by many as the Capitol's official scorekeeper, is not good news for Schwarzenegger, who said last week that he thinks his new proposal makes progress toward closing the budget gap.

Hill said Schwarzenegger's updated budget is worse than the governor's January plan in two main ways: Some health and welfare cuts are withdrawn, and spending on local government and transportation would be cut now in exchange for increases later.

"In our view, the May revise misses an opportunity to make further progress in addressing the state's long-term structural imbalance," Hill said. The major problem inherited by Schwarzenegger when he took office last fall is a big imbalance between spending and tax revenue, which is being temporarily closed in part by a $15 billion bond approved by voters in March.

For several years, lawmakers have used borrowing, deferred spending, and accounting gimmicks to balance a budget for one year. The gap reopens because legislators can thus avoid bringing spending into line with tax revenue. Hill estimated that under the governor's January plan for the fiscal year beginning July 1, a gap of $7 billion would reopen in the following year, fiscal 2005-06.

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