Official State Debt Set at $3.27 Billion

The state government ended the last fiscal year nearly $3.3 billion in the red, a deficit more than twice the size of the state’s previous benchmark for fiscal futility, Controller Gray Davis said Tuesday.

Although the fiscal year ended five months ago, the shortfall could be trimmed by $1 billion if the Legislature fixes a technical glitch in a budget-related bill setting education spending levels, Davis said.

The magnitude of the year-end shortfall has been known for months, but Davis by law is the official arbiter of the condition of the state’s books and his precise description of the deficit goes down as the final word on the matter.

In his report, the controller said the general fund began the 1991-92 fiscal year $1.1 billion in the hole after carrying over a deficit from the previous 12-month period.

During the year ending June 30, the state collected $42.1 billion in taxes and other revenues for the general fund and spent a little more than $44.3 billion. That operating deficit of $2.2 billion, combined with the red ink carried over from the year before, left the state with a total deficit of $3.27 billion.

Davis acknowledged that when the final accounting is completed, the deficit probably will be $1 billion smaller.

The shrinkage would occur if the Legislature fixes an education spending law that was supposed to recapture $1 billion for state use that the public schools received last year above the minimum level required by the state Constitution. A drafting error has kept that provision from being enforced.

The numbers from Davis are consistent with two recent reviews of the state’s fiscal condition that predicted that budget writers in 1993 will face a shortfall of $4 billion to $7.5 billion.