April 29, 2008

Budget misspeak

The budget deficit could actually be much higher than Gov. Arnold Schwarzenegger suggested last week, his aides said today.

Schwarzenegger "misspoke" when he framed the 2008-09 budget deficit as a $10 billion problem, according to his communications director, Matt David. Instead, the governor intended to say the 2008-09 budget deficit could be $10 billion higher than the original estimate, for a total of $17.4 billion, David said.

The governor then said Monday in Garden Grove the budget is "altogether $20 billion out of whack." That figure that includes a $2.8 billion "rainy day fund" contribution on top of the $17.4 billion deficit. The governor previously did not include a "rainy day" estimate in his deficit calculations, which is not constitutionally required, and it was unclear why he began doing so this week.

The Republican governor is scheduled to release his revised budget proposal May 14, which should render all of the pre-estimates moot.

Some suspect the governor may be shooting high with his estimates to gain leverage in negotiations over revenue increases or a long-term budget reform plan. If more people believe the budget problem is severe, the governor has a better case to make.

During his weekly press briefing, Schwarzenegger press secretary Aaron McLear on Tuesday portrayed the budget problem as a $20.2 billion hole, which would be exactly 20 percent of a $101 billion spending plan. Schwarzenegger proposed roughly 10 percent cuts in January.

"It could be as bad as $10 billion worse," McLear said. "That's why we need to start working on this now. Because every day that goes by that we don't work on this budget, it gets worse."

The $10 billion deficit addition, McLear said, is an "internal estimate."

As always, it's subject to change.

Posted by Kevin Yamamura on April 29, 2008 2:01 PM