November 14, 2007

State leaders react to deficit report

With the state facing a $10 billion budget hole, all four legislative caucuses and Gov. Arnold Schwarzenegger have issued statements.

Gov. Arnold Schwarzenegger:

"Since the day that this year's budget was signed, we have made it abundantly clear that next year's budget will be a difficult one. Today's developments underscore that fact and they also underscore the need to begin serious discussions on budget reform. I hope that the Legislature will join with me to make this a priority.

"Knowing the challenges that we face, throughout the fall, my administration has been examining a variety of options to close next year's budget gap. I have not made any final decisions yet, but it's clear that the decisions that will be involved will be tough. I have a constitutional requirement to submit a balanced budget to the Legislature in January and I will fulfill that responsibility."

Assembly Speaker Fabian Núñez:

"This will be a challenge, no doubt, but it's one we have to work out together: Democrats and Republicans, Assembly and Senate, Legislature and Governor. It's not the time for drawing any lines in the sand that ultimately undercut our ability to provide the services Californians want in the effective manner they deserve. I'm committed to meeting the challenge, and I am hopeful everyone involved will rise to the occasion."

Senate President Pro Tem Don Perata:

"Since last May, I have talked about California's flawed and unbalanced fiscal structure. Today's LAO report is another sobering reminder that quick fixes will not provide a long-term solution to the state's budget woes.

"I once again call on the Governor and my fellow legislative leaders to begin a serious discussion about how to build a structurally balanced budget.

"There is an ongoing gap between state expenditures and revenues that this Governor helped create by slashing Vehicle License Fees and refusing to balance that loss with revenue from another source. That alone accounts for $6 billion of this problem.

"An honest dialogue about closing the budget gap must include exploring all options."

Assemblyman Roger Niello, Republican vice-chair of the Budget Committee:

"Today's forecast by the legislative analyst of an $8 billion structural deficit should serve as a wake-up call to those who want to continue to grow government. There is no more urgent priority than reducing spending and taking responsible action now to reduce the deficit.

"We cannot continue to put off the tough decisions required to get our fiscal house in order without facing serious consequences for our state. While tax revenues to the state have softened, the problem continues to be overspending. We must get our spending in line with revenues. Assembly Republicans will continue to stand firm in demanding lawmakers act responsibly and resist costly new government programs, while rejecting the call to raise taxes."

Senate Republican leader Dick Ackerman:

"The Legislative Analyst provided a grim forecast of a nearly $10 billion budget problem despite the fact that state revenues are expected to grow by 4.6 percent.

"After years of promises, the fundamental problem continues – the state spends more than it takes in.

"During the last budget battle, the Senate Republicans warned that the economy was showing early signs of trouble, and cautioned that questionable budget assumptions would lead to out-year problems.

"We cannot continue to wait until next spring or summer to address this financial mess. We must tackle this problem head on and now. We need to look at cost containment, reexamine our budget priorities and maybe even mid-year cuts.

"While State revenues are expected to increase, it is up to the Legislature and the Governor to act responsibly and ensure that we control our spending so that it is in alignment with our growth."

Posted by Shane Goldmacher on November 14, 2007 1:22 PM