California’s Budget Deficit Vanishes Although Debt Stays

Jerry Brown, the governor of the state of California, said that the state is going to have $851 million in surplus budget once the 2013-14 fiscal year ends if the state’s legislators agree on the budget that he has proposed.

During a press conference, Governor Brown stated that it’s new and is a breakthrough following California possibly returning to the black after being in the red for years.

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Brown credited the move to the new taxes approved by the voters back during the elections, aside from the steep budget cuts. He added that the cuts were three times the amount of the increase in taxes. The Governor further stated that the ill-advised tax cuts that previous Governors approved, overspending as well as the recession were the reasons the state has had financial issues.

In spite of the welcome news for the deficit, the Governor was concerned that there was a debt that still needs to be dealt with. The state of California still has over $34 billion in debts, which ought to drop to a mere $4 billion come the year 2017.

Likewise, Brown advised that federal economic insecurity with the deficit of the nation as well as the rising costs of health care are other issues that the state needs to watch out for.

Under the Governor’s proposal, schools are going to get $56.2 billion in funds for the following fiscal year even though educators asked for additional funds in order to prevent additional tuition fee increases, especially at public universities. Brown advised being more efficient with the allocated funds in order for the increases to be avoided.

Additionally, Governor Brown allocated $350 million for California’s Medi-Cal program in order to employ the federal overhaul of the Affordable Care Act. However, that could change as the provisions of the law are enacted.

In November, California’s Legislative Analysts’ Office projected a state deficit amounting to $1.9 billion, which is down from $15.7 billion for the present fiscal year.

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