*Report: State budget faces deeper-than-expected shortfall

That means $2 billion worth of cuts will likely be triggered next month - much of it in K-12 reductions. A new report by the Legislative Analyst's Office expects California to fall $3.7 billion short of the $4 billion revenue bump the state was supposed to have received this year. The absurdly optimistic prediction was instrumental in getting a budget deal last June, but in the subsequent months it's become clear that revenues are not meeting those projections. The enacted budget had the state receiving $88.5 billion in revenues and transfers, while the LAO says it will be $84.8 billion. From Capitol Alert:

If Finance issues a projection next month similar to the analyst's, the state must cut K-12 funding by $1.4 billion. It must also slash University of California and California State University systems by $100 million each. The state's developmental services program would lose $110 million, while In-Home Supportive Services would see a $100 million reduction. The Legislature and governor could still intervene before those cuts take place in January and February. The K-12 cut would be the most controversial, given the priority voters place on public education, the influence of K-12 advocates and the fact that 143 of the state's 1,032 school districts are in financial jeopardy.

The irony is that California's economy is clearly one the mend - tech and exports are two big reasons - and to a large extent it's reflected in tax revenues. But the improvement has been incremental, and Gov. Brown, along with state lawmakers, were factoring in a much larger influx.

Here's the LAO report.

*State Finance Director Ana Matosantos says some mid-year cuts are likely.


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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
 
Mark Lacter, business writer and editor was 59
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