Election Section

Davis: No tax hike despite deepening budget crunch

By ALEXA HAUSSLER Associated Press Writer
Thursday April 18, 2002

SACRAMENTO (AP) — State revenues have dipped more than $1 billion below expectations this year and officials are anxiously awaiting the results of April’s tax returns to gauge California’s fiscal health. 

The April figures will pave the way for the annual May budget revise that likely will include deep cuts if revenues continue to sag. 

Gov. Gray Davis warned earlier this week that for the first time he may not be able to meet the school funding level required by Proposition 98, the voter-approved measure that requires about 35 percent of the state’s general fund to go to public schools. 

Several lawmakers have proposed a variety of tax hikes to help boost the state’s treasury. 

But Davis, who faces re-election in November, said he has no plans to resort to tax increases to patch an ever-growing budget hole. 

“That is my expectation: that we can tighten our belt and get through a difficult year,” Davis said Wednesday after speaking to a group of business leaders in Sacramento. 

“That’s what individuals have to do, that’s what they expect their government to do and that’s what we’ll do,” he said. 

California already faces a budget shortfall of more than $14.5 billion, according to estimates by the Legislative Analyst’s Office. 

A monthly finance bulletin issued by the state Finance Department said there are signals that the economy is picking up, including the creation of 21,000 nonfarm jobs in California since November. 

But at the end of March, state revenues for the year were $1.14 billion lower than the $46 billion that was expected and sales, income and corporation tax receipts continued to sag, according to the report. The revenue shortfall could translate to an even larger-than-expected deficit. 

On May 14, Davis will submit his plan to revise the 2002-03 budget plan, based on revenue figures through April. The state receives its clearest fiscal picture of the year at the end of April, when the bulk of income tax receipts pour in. 

Davis Wednesday said his finance advisers have not yet determined how much, if any, he will need to trim from the $100 billion budget proposal he released in January. 

“We are just positioning ourselves for a whole variety of different scenarios,” Davis said.