Keeley estimates $20 billion state budget deficit

Assembly Speaker Pro Tem Fred Keeley gave an insider’s account
Monday of state legislation recently passed while giving a heads-up
for state Sen. Bruce McPherson’s seat if the Republican from Santa
Cruz is elected lieutenant governor.
Assembly Speaker Pro Tem Fred Keeley gave an insider’s account Monday of state legislation recently passed while giving a heads-up for state Sen. Bruce McPherson’s seat if the Republican from Santa Cruz is elected lieutenant governor.

Keeley, D-Santa Cruz, told members of the San Benito County Hispanic Chamber of Commerce at a lunch meeting that the most important single issue that dominated the state budget talks this year was how to solve the state’s $24 billion deficit.

Keeley said last year the state’s energy crisis pushed other issues off the table, preventing any action take, but on the energy crisis.

“The budget is everything else,” he said. “The budget is the single most profound policy document that we adopt into legislation.”

Because Keeley sits in the second highest seat of leadership in the House, he had the primary responsibility of designing the budget compromise that led to the adoption of the budget in August. The final budget cut $8 billion from non-education and non-health services such as state parks and the Department of Fish and Game.

“But we didn’t solve it (the budget problem),” Keeley said. “Next year the estimates are there’s going to be a $12-15 billion deficit. I estimate $20 (billion).”

Keeley asked chamber members to “step back and ask what kind of California you want to live in.” Programs that survive budget cuts are those that improve quality of life, be they education or health care, he said.

“You have to ask that question now because we’re staring at multiple years of deficit,” Keeley said. “If you don’t answer that question first, then you won’t be able to successfully budget over the next three years.”

Having a vision and a commitment to values and principals is the key to put a budget together, Keeley said – “Based on what you know you can manage first,” he said.

The general fund is heavily weighted by what is coming in from personal income tax revenue and the state’s share of sales tax, he said.

Keeley said there is too much volatility with the current revenue structure and it is hard to track the health of the economy, and that a sales tax on services would help offset the unstable tax revenue source.

“You pay a sales tax on the suit you wear to see a lawyer to do a will, but you pay no sales tax on the will he prepared for you,” he said.

After serving in the Assembly for six years, Keeley, in his words, “termed out” and will leave the Assembly the first Monday in December.

Though he doesn’t represent San Benito County, he said he has worked with McPherson, who has done an “extraordinary job,” and said he has also enjoyed working with Assemblyman Simon Salinas, D-Salinas.

Keeley said if McPherson is elected lieutenant governor that a special election will be held and he will run.

“Go, Bruce, go,” he joked.

If McPherson is not elected, the Senator said Gov. Gray Davis is interested in appointing him to a position in the Cabinet.

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