California Faces $16 Billion Budget Deficit, Higher Than the $9.2 Billion Estimate in January (Governor Brown Video)

Source: Youtube
In his address to the people of California today on YouTube, California Governor Jerry Brown said Cali now faces a $16 billion budget deficit this year, up $6.8 billion from his estimate of $9.2 billion in January. To close the gap, Governor Brown wants plan to increase income and sales tax rates to spare budget cuts to public safety and schools. At least, as of yesterday, California was not on CMA's top ten list of sovereigns most likely to default via their credit default swaps. I posted yesterday that Illinois was higher than Spain at #9 on the list. In the video, Governor Brown said:

"We are still recovering from the worst recession since the 1930s. Tax receipts are coming in lower than expected, and the Federal government and the courts have blocked us from making billions in necessary budget reductions. The result is that we are now facing a $16 billion hole, not the $9 billion we thought in January. This means that we will have to go much further and make cuts far greater than I asked for in the beginning of the year."
"That's why I'm bypassing the gridlock and asking you, the people of California, to approve a plan that avoids cuts to schools and public safety. The plan: ask high income earners to pay up to 3% more in their income taxes for 7 years, and increase sales taxes by 1/4 of 1% for 4 years."

Bloomberg has the actual numbers:

"It would temporarily raise the state sales tax, already the highest in the U.S., to 7.5 percent from 7.25 percent. It would also boost rates on income starting at $250,000. The 10.3 percent levy on those making $1 million or more would rise to 13.3 percent, the most of any state."

It's interesting that California will collect $1.5 billion in tax revenue from the Facebook IPO. More from Sacbee:

"The governor's grim outlook could have been worse had he not counted an infusion of tax revenues from an initial stock offering by Menlo Park-based Facebook. His deficit estimate assumes the stock sale will bring in $1.5 billion more through June 2013, according to Department of Finance spokesman H.D. Palmer. If Brown's tax initiative passes, it would generate an additional $400 million from those who sell their Facebook stock."