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After months of rancorous bickering, California legislators finally resolved their budget crisis, or so they thought. They relied heavily on projected increases in revenues. Now the state is saying the revenues were $500 million short just for the first month of the fiscal year, according to the SF Chronicle, a projection that could very well increase over the coming months, with university and K-12 education seeing additional cuts, on top of those already imposed.
As part of the budget plan, automatic widespread cuts will occur if revenue falls $1 billion short of projections. UC and CSU would each lose another $100 million, on top of the $650 million already cut, though K-12 schools and community colleges would be exempt. Services for the developmentally disabled and In-Home Supportive Services for the elderly, blind and disabled would also each lose $100 million more. However, if the state finds itself $2 billion short, even K-12 education and community colleges would get slashed again. If revenue is $4 billion short, the public school year could be reduced by up to seven days.
The $500 million shortfall is only for the first month of the current fiscal year and does not take into account potential losses from the recent stock market crash and continued volatility. Corporate taxes were down $70 million below expectations, while retail sales and use taxes were down $139 million. Personal income taxes were above estimates, but would likely decline as a result of Wall Street volatility.