Weekend Economists Lost in Space (and Time) May 11-13, 2012

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69. California's Deficit Explodes To $16 Billion, Threatening 'Severe' Cuts

http://www.businessinsider.com/californias-deficit-explodes-to-16-billion-threatening-severe-cuts-or-new-taxes-2012-5

SACRAMENTO, Calif. (AP) — California's budget deficit has swelled to a projected $16 billion — much larger than had been predicted just months ago — and will force severe cuts to schools and public safety if voters fail to approve tax increases in November, Gov. Jerry Brown said Saturday.
The Democratic governor said the shortfall grew from $9.2 billion in January in part because tax collections have not come in as high as expected and the economy isn't growing as fast as hoped for. The deficit has also risen because lawsuits and federal requirements have blocked billions of dollars in state cuts.
"This means we will have to go much farther and make cuts far greater than I asked for at the beginning of the year," Brown said in an online video. "But we can't fill this hole with cuts alone without doing severe damage to our schools. That's why I'm bypassing the gridlock and asking you, the people of California, to approve a plan that avoids cuts to schools and public safety."
Brown did not release details of the newly calculated deficit Saturday, but he is expected to lay out a revised spending plan Monday. The new plan for the fiscal year that starts July 1 hinges in large part on voters approving higher taxes.


Read more: http://www.businessinsider.com/californias-deficit-explodes-to-16-billion-threatening-severe-cuts-or-new-taxes-2012-5#ixzz1ulDVUjjP