California Discloses A $25.4 Billion Budget Hole,

The California Legislative Analyst's Office has just released the latest fiscal outlook. It's not pretty. The state discloses a $25.4 billion budget "problem" which consists of a $6 billion deficit for the remainder of 2010-2011, and a $19 billion budget deficit forecasted for 2011-2012, thanks to a $8 billion plunge in revenues for the general fund, as temporary tax increases adopted in 2009 expire. Furthermore, as the state admits: "One major reason to stop passing the state’s problems to future Californians is that the state’s long-term fiscal liabilities—for infrastructure, retirement, and budgetary borrowing—are already huge. The costs of paying down these liabilities already are reflected, to some extent, in the state’s recurring deficits, but these costs will only grow in the future. By deferring hard decisions on how to finance routine annual budgets of state programs to future years, the state risks increasing further the already immense fiscal challenges facing tomorrow’s Californians." Luckily this is all rhetorical, and Cali will just take the Bernanke pill, and kick the can down the road. And as state budgets ultimately have to balance, at least on paper, one wonders if Cravath's ploy with its pro bono Harrisburg gimmick is merely to get Sacramento on a silver platter when the Chapter 9s move to the Golden State. One can be certain that one won't be pro bono.