- The Washington Times - Wednesday, January 15, 2003

SACRAMENTO, Calif., Jan. 15 (UPI) — California's gaping budget deficit was revised downward Wednesday to a still-impressive $26 billion by the Legislature's chief analyst, who called earlier projections of a $35 billion gap by Gov. Gray Davis "overstated."

The Legislative Analyst's Office said its analysis of the $89 billion 2003-2004 spending plan proposed by the governor took a closer look at revenues and at spending programs that had not been funded and concluded the deficit was not quite so dire.

"Although this shortfall estimate and the level of required solutions is somewhat overstated, the problem is still enormous," the report said. "The governor has proposed a comprehensive plan for addressing the state's fiscal problems. The Legislature faces a formidable task in carefully evaluating the plan's individual elements and the many important policy issues it raises."

Gov. Davis proposed a series of spending cuts and $8 billion in tax increases and fee hikes as a means of slashing the staggering deficit, which is blamed in large part on a decline in income tax revenues that resulted from the downturn in the Internet sector and the stock market in general.

While generally satisfied with Davis' proposal, the LAO opined that it appeared to have overstated both the scope of the problem and "the level of the required solutions," a point of view some Republican critics in Sacramento had raised earlier this month.

Those critics speculated that Davis, a former California State Controller, was sounding the alarm in order to make it easier to push tax increases through the Legislature, which will require some Republican votes in order to get the two-thirds majority required to pass the budget.

The LAO stated that it was using different methods to review the budget than the Department of Finance used, and discarded plans and programs that had not been officially funded.

"Our standard for this baseline is spending that would occur under current law," the analysts' report said. "In contrast, the administration's baseline in some cases reflects additional spending that would be required to achieve the administration's policy goals as well as proposals that have not yet been adopted."

(Reported by Hil Anderson in Los Angeles)

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