Reuters is reporting that Standard and Poor’s stated on Monday that California will have to cut more spending in in order to balance its 2013 fiscal budget. The state currently has a $15.7 billion deficit, which is Reuters reported to be “30 percent of the total gap all states” will face this fiscal year:
State spending as a share of California’s total economy is the lowest in 39 years. But the state’s tax revenue system is “dysfunctional” and California relies heavily on volatile personal income tax collections, which are expected to total 63 percent of general fund revenue in 2013, S&P said.
California’s economy “remains depressed and its revenue recovery is sluggish” three years after the Great Recession ended, the credit agency added.
The final budget is due this week on June 15 and the S & P has already warned California it could reverse its rating of the golden state. As noted in a previous Water Cooler post, the S & P is cautioning California lawmakers to pass a solid budget or the financial rating agency could reverse the current rating of the state, which was upgraded back in February from stable to positive. However, California still has the lowest S & P rating of any state. A fact California Governor Jerry Brown’s spokesman Gil Duran glosses over when bragging about the state’s upgrade in February.