This editorial appeared in The Modesto Bee.
Gov. Schwarzenegger and some other Republicans frequently use this line about California: "We don't have a revenue problem. We have a spending problem." Yet as the governor acknowledged last week, California does have a revenue problem. It has nurtured one for decades.
Because of the state's reliance on capital gains taxes and sales taxes, its revenues rise and fall based on stock market performance and consumer confidence. This year, the revenue roller coaster has taken an epic downturn.
That means that lawmakers, in a special session this month, must reduce spending and-or increase revenues by a staggering $11 billion in the current year. And they can't dawdle. Every day, the state spends $1 for every 90 cents it brings in, and the hole gets deeper.
To add to their challenges, lawmakers can't simply borrow or defer payments. That's because the revenue slide isn't just a one-year headache. Without multiyear cuts or new revenues, the deficit could mushroom to $28 billion by June 2010, according to the impartial Legislative Analyst's Office.
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