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Wilson’s Budget Blueprint Shaky, Analyst Says

<i> Associated Press</i>

Gov. Pete Wilson’s budget blueprint is threatened by scarce federal funds and pending lawsuits, and faces a $2-billion gap through the middle of next year, the Legislature’s nonpartisan fiscal adviser reported Friday.

The legislative analyst’s office said Wilson’s $56.3-billion proposal for the fiscal year beginning July 1 contains “a number of major budget risks,” and would be balanced through cuts in services, most notably welfare, health care and other programs.

At the same, the governor has proposed 15% cuts in business and personal taxes, phased in over three years, which would cost the state about $7.6 billion. The Administration says that cost would be covered through improved revenue growth spurred by a rejuvenated economy.

The budget also includes a 13.4% increase--more than $400 million--for prisons, and about a 4.5% boost for education.

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But Legislative Analyst Elizabeth Hill said the long-term impact on the budget would be major reductions in social programs.

“If the governor’s fiscal policies for education, corrections and tax reductions are projected over the next four years, it is probable that the remaining 40% of the budget would face program cutbacks,” primarily in health, welfare and general government, the report said.

There is also uncertainty over the outcome of lawsuits facing the state over earlier budget-related decisions. Together, the lawsuits represent a $3.2-billion risk, the bulk of which--about $3 billion--stems from loans made to schools several years ago.


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