The analyst said $2.7 billion of the state's reserve fund will be eaten up by lower-than-expected tax revenue through next summer. The state will take an additional $1 billion hit on falling local property taxes from shrinking home prices. Additionally, the state must make up for lower property tax revenue so schools will remain fully funded. [Link]
So now that the Governor is face with projected deficits for the remainder of his term, it will be interesting to see which Arnold Schwarzenegger takes the lead in solving this problem. Is it going to be good Arnold who works on a bipartisan basis to comes up with a solution that includes both taxes increases and budgets cuts, or are we going to see the bad partisan Arnold who is only going to propose budget cuts? Which one will it be?