California Governor Exaggerated Budget Woes, Analyst Says

By Chris Rizo | July 7, 2008 | 8:29 PM EDT

Sacramento ( - California Gov. Gray Davis is exaggerating the size of the state's two-year budget shortfall, the Legislature's top economic advisor said.

In a report released Wednesday, nonpartisan Legislative Analyst Elizabeth G. Hill said the Democratic governor's estimate is nearly $8.5 billion too high. Hill estimates the state will be at least $26 billion short on cash over the next 18 months, a sharp contrast to Davis' $34.6 billion estimate.

"Although the administration has somewhat overstated the size of the problem and the level of required solutions, its budget sets forth an ambitious plan for dealing with the enormous fiscal problem facing the state," Hill wrote.

The Assembly's Republican point-man on budget matters said the analysis confirms what his caucus has been saying all along.

"The governor deliberately inflated the size and scope of the budget deficit in order to mislead working California families that taxes must be raised," said Assemblyman John Campbell.

Last week, Davis released his fiscal year 2003-04 state budget proposal, which relies on, among other things, a combination of $20 billion in spending cuts and $3.8 billion in tax increases to eliminate an estimated $34.6 billion shortfall.

Assemblyman Bob Pacheco said Davis' credibility with him and other Republican lawmakers is deteriorating -- rapidly.

"We are very distrustful of his motivations to raise taxes," Pacheco said. "We really do want to work with him but this type of gamesmanship is a problem for us."

Part of the variation in numbers, Hill said, is that her office and the governor's Department of Finance use different methods to measure anticipated revenues. But even if the two used the same technique, she cautioned, Davis' estimate would still be $3 billion higher than the legislative analysis.

Democratic Assemblyman Ed Chavez, chairman of the Assembly Committee on Revenue and Taxation, said he fears that Hill's announcement may stymie Democrats' chances of pushing through any significant tax increase to avert many of the deep program cuts the governor is proposing in his budget.

"The political realities of tax increases are not something Gov. Gray Davis or any elected official would cook the books to pursue," Chavez said. "Why would I -- or any other Democrat -- want to stand for re-election after having raised taxes any more than a Republican lawmaker would?"

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