Budget analyst: California deficit reaches a staggering $25.4 billion


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California faces a far-larger budget shortfall than state officials were projecting only weeks ago. The deficit over the next year and half has soared to $25.4 billion, the state’s chief budget analyst said on Wednesday.

The startling figure means the state faces an even tougher budget challenge than it did leading up to the passage of the current spending plan, which was historically late, as lawmakers wrangled over how to close the gap for 100 days into the new fiscal year. The projected deficit is the equivalent of about 29% of this year’s general fund budget. It projects California continuing to struggle to raise enough revenues to fund basic services as the state experiences a ‘painfully slow economic recovery.’


One main reason the deficit remains so large is that the spending plan signed by Gov. Arnold Schwarzenegger and approved by legislators 33 days ago relied on billions in accounting gimmicks, rosy assumptions and unlikely handouts from Washington, according to the report from the nonpartisan Legislative Analyst’s Office.

The new $25.4-billion shortfall will confront governor-elect Jerry Brown from the moment he is sworn into office in January.

Brown is vacationing this week and was unavailable for comment. The day after his election, the Democratic former and future governor acknowledged the budget gap was “very daunting,” even before the latest report.

“This will take all the know-how that I said I had and all the luck of the Irish as I go forward,” Brown said at the time.

You can read the LAO analysis here.

-- Shane Goldmacher in Sacramento