SAN FRANCISCO – California Gov. Jerry Brown announced Tuesday the state will make almost $1 billion of midyear cuts after revenue forecasts landed well short of projections baked into the current budget.
The spending cuts are a result of the state Department of Finance’s forecast that revenue would be $2.2 billion below estimates for the fiscal year, triggering the reductions as built into the budget passed in June that assumed $4 billion of revenue growth.
“This is not the way we want to run California, but we have to live within our means,” Brown said during a news conference Tuesday. “We are not Greece, we are not in a hole we cannot climb out of.”
Finance director Ana Matosantos said nearly all of the tiered cuts proposed in the budget would be triggered except that education will be saved from more than $1 billion of additional reductions. Most cuts will be effective Jan. 1.
School districts, universities, community colleges, and human services will take the brunt of the cutbacks.
The nonpartisan Legislative Analyst’s Office said in a report last month that revenues in the current fiscal year that began July 1 would likely come in $3.7 billion below projections used by lawmakers to craft the budget.
The LAO estimated about a $1 billion more in budget cuts than the Department of Finance.
According to the budget, the highest revenue forecast by either the Department of Finance or the LAO decided the size of the cuts.
Matosantos said the differences between the two forecasts happened mainly because her department had another month of data to review.
Last week, Controller John Chiang said in a statement that revenues came in during the month $497 million above projections made by lawmakers.
Credit analysts have already anticipated the possibility of the cuts in their ratings.
