NEW YORK (Reuters) - California Treasurer Bill Lockyer on Friday urged lawmakers to find long-term solutions to balance the state budget, which could have a $14 billion deficit, about $4 billion more than expected last month.
“The tooth fairy still hasn’t come. And now the state faces a budget deficit of $14 billion,” Lockyer said in a statement.
The new estimate was reported by The Sacramento Bee, which cited unidentified legislative leaders who met with Republican Gov. Arnold Schwarzenegger.
H.D. Palmer, a spokesman for the state finance department, could not be reached immediately, but he earlier said Schwarzenegger spoke with top lawmakers on Tuesday about the state’s budget situation.
The state Legislative Analyst’s Office in November projected that a slowing economy and lower property tax revenues are likely to lead to about a $10 billion deficit in the current and next fiscal year.
The looming deficit is setting the stage again for the Republican governor to call for spending cuts when he presents his initial budget next month and for the Democrat-led legislature to resist and urge tax increases, according to analysts.
Lockyer, a Democrat, said lawmakers cannot just “cut and run,” referring to service cuts. He said deficit borrowing was also not a sustainable solution.
“We probably could ‘balance’ the budget by borrowing more money, suspending laws and cooking the books. But while those moves might make us feel better today, they make us worse off in the long run. We need real solutions, not tricks,” he said.
Lockyer reiterated his recommendations first released in October.
He wants the state to broaden the sales tax base to include some services and to cut costs by reducing prison recidivism. To cut debt service, he recommended creating a new general obligation debt structure.
Reporting by Anastasija Johnson; Editing by Dan Grebler