Revised 2012-13 California Budget: Sources of the higher deficit projections

California Gov. Jerry Brown’s January budget projected a $9.2 billion shortfall; however, the May revision estimated that the budget gap will grow to $15.7 billion.

Read more: California confronted with higher deficit in updated 2012-13 budget

The revised budget attributed the $6.5 billion deficit increase to three factors:

  • Overly optimistic tax revenue forecast – $4.3 billion
  • Increase in Proposition 98 obligations for K-14 education – $2.4 billion
  • Failure to obtain Medicaid waivers from the federal government to allow the state to reduce its Medicaid matching funds – $1.7 billion

These figures add up to $8.4 billion. Factoring in the $1.9 billion in cost savings that resulted from lower-than-expected Medi-Cal (California’s Medicaid program) caseloads, the state budget gap is widened by $6.5 billion for fiscal year 2012-13.

SOURCE: Gov. Jerry Brown’s Budget May Revision 2012-13 (pages 3 – 4)


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