Latest Update—State Deficit Soars

The hole that California must dig itself out of in 2003 just got much deeper. The recent announcement of an unprecedented $21 billion state deficit this week was revised upward by Gov. Gray Davis to $34.8 billion. The bleakest budget outlook on record could exceed $40 billion, according to some budget analysts. The problem is blamed on increased spending and decreased revenues. To staunch the flow of red ink, deep statewide cuts and higher taxes may be necessary in 2003. The new year may require the largest cuts in K-12 education funding in California's history.