California' budget crisis expected to linger

08:30, May 05, 2010      

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Revenue collections in California plunged in April, dashing hopes of an easy budget fix, it was reported on Tuesday.

Revenue for April lagged projections by nearly 30 percent, or roughly three billion dollars, according to the Los Angeles Times.

April is the biggest revenue month because it is when most Californians pay their taxes.

The drop wiped out months of steady gains that legislators hoped would ease their budget troubles and restore California's economy faster than experts predicted, the report noted.

The April collections came almost entirely from personal income taxes. Most corporate and sales taxes have not yet been reported. If they, too, come in below projections, the state's budget problem would grow worse, said the report.

The retraction could prompt the government to further cut funding for schools, healthcare for the poor and services for the elderly, the report said, adding that more tax hikes may be another option.

"It's hard to imagine how we're going to (balance the budget) without doing more severe damage to the economy," said state Sen. Denise Moreno Ducheny, who chairs the Senate's budget committee.

California faces a deficit of 18.6 billion dollars, about 20 percent of general fund spending.

Sacramento has set next month as the deadline for passing a budget. But the latest development would force the government to postpone the deadline.

Lawmakers have no easy options for addressing the budget crisis as they have already cut state services severely and temporarily raised income, sales and vehicle taxes, the report said.



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