California will get little help from stimulus plan for its budget gap

Sacramento BeeJanuary 28, 2009 

California stands to receive possibly as much as $14 billion in direct budget relief from the federal stimulus plan, which the House is to consider today.

But the state, struggling to close a $40 billion budget deficit, isn't ready to cash it in just yet.

It still doesn't know how much money is coming this way. And the one-time cash infusion can't be applied for permanent costs, ones beyond 2010.

"You only can set off anything if you know that you get it permanently, because otherwise it has no effect on the structural deficit," Gov. Arnold Schwarzenegger said Monday. "And so we don't want to take money and say OK, we get this year the money and maybe next year and from then, boom, it drops off."

Financial experts say the state is likely to receive $10 billion to $14 billion in direct budget relief. But with congressional Republicans balking at the package, it remains too early to determine exactly how much money California will receive and in which form, leaders said. If they pencil in $10 billion to plug the budget hole, they would have to scramble to make up the difference if the state receives only a fraction of that amount, for instance

Read the full story at sacbee.com

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