| There are a lot of terms getting thrown around in this budget mess. There is, of course, the fact that we will take in a lot less money than we have allocated. That's your traditional budget deficit.
But there is also the issue of how much actual cash we have in our accounts. See, every summer we generally take in less money than we need. And that is compensated during other, more flush times of the year. Typically, the state sells "Revenue Anticipation Notes" to cover these holes. The trouble is that with the credit crisis combined with the fact that our credit is darn near junk status, it's tough to sell those notes. That's where the federal backstop (read:not a bailout, wouldn't cost the feds any money) would come in to save us a billion dollars or so.
All that becomes really, really important when you read the horrifying numbers that Controller John Chiang just released. It is not pretty:
Chiang said the revenue projections for May -- made in early May as part of the governor's revised budget proposal -- were off $827 million when the books closed on the month.
Personal income taxes were off $475 million, 23 percent below estimates. Sales taxes (off $109 million, 3.3 percent) and corporate taxes (off $84.4 million, 25.8 percent) also fell below projections.
Year over year, state general fund revenue in May was down 17.7 percent -- $1.14 billion -- from May 2008. One possible bright spot: Corporate tax collections were up over May 2008, but still below estimates in the governor's May revision.
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Chiang has said the state will run out of cash in July, projecting a $2.78 billion cash deficit on July 31. (CapAlert 6/10/09)
You can read the whole report (PDF) or check it out over the flip if you are so inclined, it is very readable. It's almost like a magazine with some graphics. I almost expect to see an ad for an iPhone somewhere near the end of the report.
Nonetheless, read through report if you dare. The Controller has compiled some economic statistics for the last few fiscal years, and the numbers are not good. Just in case you needed some reminding.
The state has actually been able to save here and there, so it is not clear how this report would place the total budget deficit number. However, our controller did leave us with that cash flow number, which could force the two parties to make a deal sooner rather than later.