SACRAMENTO — California faces $2 billion in automatic spending cuts at the first of the year that will reduce funding for public schools, higher education and a range of state services, according to a nonpartisan fiscal analysis released Wednesday.
The bleak assessment by the state's Legislative Analyst's Office warns of declining tax revenue and a rocky statewide economic outlook that will lead to budget shortfalls for years to come.
Democratic lawmakers and Gov. Jerry Brown had hoped for a $4 billion increase in tax revenue through the current fiscal year when they passed the state budget last summer. The analysis released Wednesday said revenue — a majority which comes from income, sales and corporate taxes — will run $3.7 billion lower than the state assumed.
Based on a pre-approved budget mechanism, that shortfall will translate into $2 billion of automatic cuts in the weeks ahead.
"Unfortunately, there are few easy options left for balancing California's budget," the legislative analyst wrote. "Difficult program reductions already have been passed, and significant one-time budget actions may be more elusive than in prior years."
California's general fund, its main checkbook for paying most state expenses, has dropped from $103 billion at the start of the recession in 2007 to $86 billion this year, a decline of more than 16 percent. Lawmakers have been making billions of dollars in cuts each year to cope with plunging tax revenue.
The coming year will provide more of the same, according to the analysis released Wednesday.
The analyst said because of the trigger cuts and other budget actions, California faces a $3 billion shortfall through the remainder of the fiscal year and is expected to have $10 billion less than the state needs in the fiscal year that will start July 1, resulting in a $13 billion gap over the next 18 months.
The current budget was based on a combination of spending cuts, fee hikes and projections of higher tax revenue in the months ahead. Republican lawmakers, who opposed tax increases, had warned that the revenue projections were overly optimistic.
"The Legislative Analyst's Office report indicates, as predicted, that the budget passed by Democrats with only a majority vote was overly optimistic and based on shaky assumptions," Assemblyman Jim Nielsen, R-Gerber, vice chairman of the Assembly Budget Committee, said in a statement.
He also noted that state spending is projected to increase by 12 percent in the fiscal year that will start July 1.
"It indicates that a lot more needs to be done to get California's budget under control, and that does not happen through tax increases," he said.
The analyst's report was one of two revenue projections called for in the state budget. The next will be released Dec. 15 by the governor's Department of Finance. The automatic spending cuts — referred to as "trigger cuts" in the Capitol — will be based on whichever report contains the higher revenue projections.
The analyst projected that midyear cuts would have to be made because revenue in the current fiscal year will fall $3.7 billion below the $88.4 billion the governor and state lawmakers had desired.