California is just now starting to emerge from years of budget deficits. The non-partisan Legislative Analyst Mac Taylor is projecting the state's first surplus since 2001 within the next couple of years. But Taylor says that projection makes a very big assumption:
Taylor: "It assumes that the
fiscal cliff at the federal level is resolved satisfactorily.
If that were not the case, these numbers would look very different,
because most people are forecasting a slowdown or recession if the
fiscal cliff is not resolved."
For California, that could lead to a revenue loss of 11 billion dollars over two years.
The "fiscal cliff" refers to the mix of tax increases and budget cuts that will automatically take effect if Congress and the president can't make a deal.