California May Get Revenue Boost, Though Finances Still Strained

by Leroy Baker, Tax-News.com, New York

30 October 2003

It has been revealed that an additional $1.3 billion could flow into the coffers of the Californian state government as the economy shows signs of a recovery, though state Controller Steve Westley has warned that it will not be enough to repair the state’s growing fiscal deficit.

"While this is very good news, the second part of the story is that it is not enough to pay the rent," Westley said in an Associated Press report on Tuesday. "As much as we have cash now and the economy is strengthening, we will have a large hole if we do not get the fiscal recovery bonds done," he added.

Westley argues that the situation could be exacerbated if newly elected Governor Arnold Schwarzenegger repeals the recent increases in car tax and delays a planned $10.7 billion bond issue, which may be put to a public vote early next year. With the risk that voters may reject the deficit bond measure, Westley claims another $8 billion could be added to the deficit by June next.

According to the report, Westley has been in conference with Schwarzenegger’s audit director Donna Arduin to discuss cost cutting ideas such as borrowing at lower rates of interest and a more aggressive pursuit of tax evasion.

Recommended