As the annual budget deliberations get under way today with the release of Schwarzenegger's revised budget, Democrats do not like a plan to freeze welfare payments, Republicans are cautioning about spending, and a declining housing market is dampening the outlook for next year. Where has the windfall of dollars come from? From you and me: personal income taxes, which account for more than half of the state's $100 billion-plus general fund, and those tax receipts surged in early April, the state ending up with about $200 million more in personal income taxes than the governor had estimated in January -- a projection that itself was called overly rosy. "Income taxes came in at a level no one thought possible a few weeks ago," Assembly Budget Committee Chairman John Laird, D-Santa Cruz, said last week. "We thought we were headed toward a tanking budget."Assembly Republican leader Mike Villines of Fresno said that although he is expecting a host of hard budget decisions, April "made everyone breathe a sigh of relief." "We're at a point in the economy in which every day there is some contradictory bit of information," said Chuck Williams, dean of the University of the Pacific's Eberhardt School of Business. "The stock market plunges, then it rises. There is mixed data on inflation. There's a lot of uncertainty and ambiguity." Williams said he expects the state's economy to continue to grow at a lower rate than in the past few years, but at a healthy clip nonetheless.
There may be good news about the state budget
this year. Good news that was unexpected because of what was forecast as a
downtrend year for the state fiscally. However, because billions of extra dollars unexpectedly
flowed into state coffers last month things are looking up. That's not to say
the budget debate will be easy.
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