Can You Balance the California Budget?
Kurt Brouwer July 2nd, 2009
The Los Angeles Times has a nice interactive tool that lets you try to balance the California budget:
Try your hand at closing California’s budget shortfall, estimated at $24 billion. It’s not easy, but it can be done. Cut spending, raise taxes and/or borrow to get the state out of the red. For each choice — drawn from proposals from across the political spectrum — we’ve tried to give some sense of the effects. As you craft your proposal, the Deficit Meter will show your progress.
The tool looks like the one below. But, to try your hand, you will have to go to this LA Times page:
Source: Los Angeles Times / David Lauter and Evan Halper / Sean Connolley
Data: California Department of Finance
One problem with this interactive tool is that it uses the starting deficit of $24 billion, which is not the actual deficit for this year and that makes balancing the budget much harder than it needs to be. The actual deficit is around $12 billion or so, considerably below $24 billion, as this piece from the Orange County Register indicates:
Chapman University economists, who were among the first to correctly identify the onset of the current national recession, say that the state of California has over-stated its actual deficit by about $12 billion. Chapman President and economist James Doti first raised the issue on Wednesday during the university’s mid-year economic udpate, held at the Costa Mesa Hilton. Doti said the state’s actual deficit is roughly $12 billion, not the $24.3 billion figure cited by the Schwarzenegger Administration.
Doti followed up on that remark Thursday night in an email, saying: “I would place it at $12 billion, as I said at the forecast conference. The Gov’s office gets a higher deficit by adding the accumulated deficits in prior years of roughly $7 billion and a contingency reserve of $5 billion. Can you imagine what the federal deficit would be if it added the sum of all prior deficits (essentially our national debt) to it? And why in a year when we are in a deep recession are we adding a $6 billion contingency.? That should be done in good years - not recession years.”…
I actually went through the exercise and did balance the budget by putting in $12 billion in cuts, which is all we really need this year. Unfortunately, the LA Times graphic does not allow modest cuts in areas such as retiree benefits, pension contributions so it makes things more difficult because it is either all or none in those categories.
Also, there is a bit of editorializing in the pop up screens on the LA Times’ site, but with those quibbles, it’s pretty good.
Via: Paul Kedrosky
- Business , Economy , Geopolitics , debt , income taxes
- Comments(0)
Did you enjoy this article?
