California Deficit Swells to $16 Billion, Governor Brown Says

California Governor Jerry Brown said his state’s budget deficit grew to $16 billion amid a tepid economic recovery that sapped tax collections even as actions by the federal government and courts blocked cost cutting measures.

The shortfall has widened from the $9.2 billion Brown estimated in January, after April income-tax revenue missed budget forecasts by $2 billion. He’s set to unveil a revised spending plan tomorrow and said he will need to make cuts even deeper than he has already proposed.

Brown, 74, set out an initial budget in January with $92.6 billion in spending for fiscal 2013, which begins in July. That plan stripped more than $4 billion from health and welfare programs while relying on higher income and sales taxes. The levy increases will go before voters in November. If rejected, schools will lose $4.8 billion midway through the year.

“We are still recovering from the worst recession since the 1930s,” Brown said yesterday in a YouTube video cited on his Twitter post. “Tax receipts are coming lower than expected and the federal government and the courts have blocked us from making billions of necessary budget reductions. The result is that we are now facing a $16 billion deficit.

“This means we will have to go much further and make cuts much greater than what I asked for at the beginning of the year,” Brown said. “We can’t fill a hole of this magnitude with cuts alone without doing severe damage to our schools. That’s why I have bypassed the gridlock and am asking you, the people of California to approve a plan to avoid further cuts to schools and public safety.”

Brown last week submitted more than 1.5 million signatures to place the tax measure on the ballot. It would temporarily raise the state sales tax, already the highest in the U.S., to 7.5 percent from 7.25 percent. It would also boost rates on income starting at $250,000. The 10.3 percent levy on those making $1 million or more would rise to 13.3 percent, the most of any state.

To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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California Governor Jerry Brown

Ken James/Bloomberg

California Governor Jerry Brown introduces his 2012-13 budget proposal at the State Capitol in Sacramento on Jan. 5, 2012.

California Governor Jerry Brown introduces his 2012-13 budget proposal at the State Capitol in Sacramento on Jan. 5, 2012. Photographer: Ken James/Bloomberg