California lawmakers have reached a budget deal as of late in the day Monday. According to the New York Times, the deal contains $15.5 billion in cuts, about $2 billion in borrowing, $4 billion in new revenues and about $3 billion in accounting maneuvers like shifting a payday into the next fiscal year.

The state is making up a $26 billion deficit, and the amount of cuts means that just about everyone will feel the pain of this new budget deal. Children’s healthcare programs and the welfare program both took big cuts. Perhaps hardest hit were the schools, which have already suffered an $11 billion cut, and are now going to have another $650 million cut. Thankfully, the law requires California to pay back the money it cut from schools. There is a provision in the deal that will make sure this money goes back to the schools, because California has a history of borrowing from itself and not paying the money back to where it was borrowed from.

The $2 billion in borrowing is coming from property taxes from localities around the state. The towns and cities will suffer the loss of the money temporarily, as the agreement requires the borrowed money to be paid back within three years, as the state’s economy and financial situation improves. Localities that are bankrupt or close to it will be exempt from lending to the state.

Several economists are predicting the end of the so-called “Great Recession,” which would make California’s plans to pay localities and the school system back realistic. However, if the economic downturn continues beyond fiscal year 2010, I fear the state may find itself in exactly the same position: making cuts and borrowing from it’s cities just to get by. My fingers are crossed for that promised economic recovery.


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Andy Gillin

Andy Gillin received his Bachelor’s Degree from the University of California at Berkeley and his law degree from the University of Chicago. He is the managing partner of GJEL Accident Attorneys and has written and lectured in the field of plaintiffs’ personal injury law for numerous organizations. Andy is a highly recognized wrongful death lawyer in California.