Introduction
The State Faces a $14.5 Billion Deficit in 2008-09

The Budget Act of 2007 projected a reserve of $4.1 billion, the largest planned reserve in the state's history. It also showed that the deficit would re-emerge next year with spending exceeding revenues by $6.1 billion.

Since those projections were made, the budget situation has deteriorated dramatically. Figure INT-02 displays the major changes that have resulted in a projected shortfall of $14.5 billion by the end of 2008-09, in the absence of any changes to state law or policy to reduce spending.

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CHAPTER HIGHLIGHTS for Introduction Back to Top

 Origin of the Structural Deficit
 The Fiscal Crisis of 2003-04 and the Workout Plan of 2004-05
 Reforming the Budget Process, the Budget Stabilization Act
image of black pointing arrowThe State Faces a $14.5 Billion Deficit in 2008-09
 Achieving Balance in 2007-08 and 2008-09


BUDGET OVERVIEW Back to Top
Budget-Balancing Reductions
In order to close the $14.5 billion budget gap, the proposed Governor's Budget includes 10-percent across-the-board reductions to all General Fund departments and programs, Boards, Commissions, and elected offices-including the legislative and judicial branches-except where such a reduction is in conflict with the state constitution or impractical. This statewide across-the-board reduction approach touches nearly every General Fund program in every department within each branch of state government. While these reductions present numerous challenges to implement, this across-the-board reduction approach is designed to protect essential services by spreading reductions as evenly as possible so that no single program is singled out for severe reductions. Reductions to General Fund budgets not under the control of the Administration are proposed as unallocated reductions. The unallocated General Fund reductions apply to the judicial and legislative branches of government and other entities such as the University of California and some very small executive branch entities.


PRINTABLE BUDGET DOCUMENTS Back to Top
Budget Summary - Introduction (pdf * - 231K) -
Provides this entire Introduction Chapter in pdf format.