The Path to California's Fiscal Crisis

May 15, 2009

California has always been a trendsetter. What happens in California often pops up elsewhere. Which raises this question: Are the perpetual billion-dollar deficits that haunt California state government unique to the Golden State or the harbinger of what other states can expect?

The answer, analysts say, is that although most states are experiencing some of the same financial stress, California’s woes are its own. At the same time, other states can take a cue from California's troubles.

The state’s financial hole is so deep that voters will decide on May 19 six questions the Legislature put on the ballot as part of budget deal in February with Gov. Arnold Schwarzenegger (R) that closed a $34 billion deficit. But with revenues plummeting, the state might still be short $15.4 billion even with the deal — and $21 billion if voters reject the package. Schwarzenegger has threatened to lay off 5,000 state workers and 1,700 firefighters, shorten the school year by five days and release 38,000 prisoners if the ballot measures fail.

Like most other states, California is being hammered by the recession, but experts say the depth and intensity of the current downturn makes the situation there particularly tenuous. “Many other states do face the same kind of problems California faces, but California’s problems are just so much more bigger and more complicated,” said Sujit CanagaRetna, senior fiscal analyst for the Council of State Governments.

Read the full report The Path to California's Fiscal Crisis on Stateline.org.

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