California's Budget Deficit Grows to $16 Billion

SACRAMENTO (AP) - California's fiscal watchdog says the state's
budget shortfall has grown to 16 billion dollars, in large part because of falling tax revenue from the depressed housing market.

Legislative Analyst Elizabeth Hill reported today the deficit could swell even more in the coming months. She said state revenue from all three major sources - personal income taxes, corporate taxes and sales taxes - are coming in below forecast.

A separate economic forecast out today shows state job growth next year could be even lower than she predicted.

Hill also criticized the governor's proposal last month to reduce spending by 10 percent in most state programs to close the budget deficit.

That would cut more than 4 billion dollars for education, lead to the release of 22,000 state prison inmates before the end of their sentences and force nearly one in five state parks to close.

Hill says the governor's budget fails to advance a plan that prioritizes state spending. She is recommending to the legislature to reject what the analyst sees as "the administration's across-the-board approach."

Hill proposes an alternate approach to closing the budget gap that she says would balance the budget through 2013.

Hill favors eliminating nonessential programs, recalculating education spending and reducing or eliminating several tax credits.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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