January 11, 2008

Spending numbers, LAO v DOF

Here is an oddity from the governor's budget numbers Thursday: he projects far higher spending in the years ahead than does legislative analyst Liz Hill. The difference inflates Schwarzenegger's estimate of the out-year problem and could play a crucial role in shaping the viability of any long-term solution.

The difference is relatively small in the budget year, 2008-09, where Hill projects programmed spending of $111.4 billion and the Department of Finance says it would be $111.8 billion if no changes are made.

But in 2009-10, Hill projects spending of $117 billion and finance says it would be $3 billion more than that, at $120 billion.

And in 2010-11, which will be Schwarzenegger's final budget, Hill says $120.4 billion and DOF pegs it at $125.8 billion.

If Hill's numbers are good, they make a good case for fashioning a three-year workout plan to bring spending back into line with revenues. The gap that needs to be closed in 2010 would be only about $4 billion in a budget of $120 billion, compared to $14 billion in a $104 billion budget today.

But if Schwarzenegger's numbers are more reliable, the problem isn't likely to shrink much on its own. He is projecting a $9 billion operating deficit in 2010-11.

Posted by dweintraub on January 11, 2008 3:27 PM