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RELEASE NEW ANALYSIS CONFIRMS FAILURE OF STATE BUDGET DEAL $16.5
Billion Deficit Will Greet Winner of Recall Election "The budget deal that was passed this summer in the dead of night is now dead on arrival," lamented Carl DeMaio, President of the Performance Institute. The analysis demonstrates how the current budget deal has in essence "fallen apart" resulting a much larger deficit that the $8 billion shortfall already projected by the non-partisan Legislative Analyst's Office. Reinforcing DeMaio's analysis, the state last week lost a lawsuit on the $2 billion pension bond that opened up an immediate operating deficit in the current year-while other lawsuits and lack of progress in achieving cost savings within state agencies threaten to add an additional $5-15 billion in deficit to the current year. The analysis also provides a scary look into nearly $20 billion in debt that has been accumulated in just 3 years of borrowing and raiding state special funds to mask the true size of the deficit. DeMaio warns: "The winner of the recall election will not only have to address a $16.5 billion operating deficit, but also will have to address the $20 billion in accumulated debt from accounting gimmicks and borrowing over the last three years." By law, the Governor has to submit a balanced budget by the first week of January that addresses the current year deficit as well as the projected deficit for the coming year. In speaking at a campaign forum in Los Angeles on Tuesday this week, Governor Gray Davis spoke in the past tense about the state's fiscal crisis, noting that while the state "had" a budget deficit, the budget deal reached over the summer had solved the problem. "The simple fact is the budget deal that has been touted by some in Sacramento as having solved the budget deficit has fallen completely apart but no one is admitting it nor acting to avert another budget crisis," notes DeMaio. The Performance Institute, the nation's leading authority and repository on performance-based management practices for government agencies, launched the California Government Accountability Council to advocate enhanced accountability in California state government. Two groundbreaking projects have already been completed: the Citizens' Budget Plan (an objective, line-by-line budget plan for the state) and the Roadmap to Reform (a proposal to create a State Reorganization Commission that was co-authored by a bipartisan group of former elected officials including Kathleen Connell and Matt Fong.) # # #
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