The California Budget Crisis: Factors Leading to the Current Budget Deficit and a Discussion of Certain Proposed Solutions

We describe California’s current budget deficit, the Governor’s proposed solution, the underlying causes of the deficit, and actions the federal government might consider to aid the states in this time of history-making deficits. Included in the discussion are details of the California General Fund, state revenues and expenditures, as well as the role capital gains income played in the current budget crisis. The views expressed in this paper are those of the authors and do not necessarily represent those of the California Franchise Tax Board or the State of California.