California’s budget gap has been revised upward again to $28.1 billion over the next 18 months.
Remember just days ago Schwarzenegger declared a fiscal emergency to deal with a $26 billion gap. Governor-elect Jerry Brown announced the new estimate last night.
The reason for the jump is Obama’s tax deal, specifically the establishment of a 35 per cent estate tax — the lowest since 1931 — plus exemptions. California will lose $2.7 billion in this arrangement.
And that’s not even the biggest black eye in the tax deal. The failure to extend Build America Bonds will end what was effectively a stimulus for the Golden State and drive up the cost of issuing new debt.
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