How Are Budget Deficits Bad

Budget may or may not be balanced

STOCKTON - Stockton Unified's school board unanimously approved the new district budget Tuesday, a spending plan that is balanced for the 2011-12 fiscal year but runs up a combined $24.4 million deficit in the following two years.

Additionally, if the cash-strapped state's rosy revenue assumptions for its proposed budget do not come to fruition, Stockton Unified and other districts statewide could face significant midyear budget cuts in the upcoming school year. The state budget passed both houses late Tuesday night.

"It's clear as mud," school board Vice President Gloria Allen said. "The more I hear, the angrier I get. It's real serious here. It's bad. We have to bite the bullet and do what we have to do. Right now, we need to really come together."

Budget presentations at meetings Tuesday morning and again Tuesday evening painted a bleak picture of the district's finances.

"It's the best the district can do at this point," said Carlene Naylor, a fiscal expert appointed by the San Joaquin County Office of Education to see Stockton Unified through its financial crisis.

State law requires school districts to balance their budgets for the current fiscal year and the two subsequent years.

For Stockton Unified to bridge its $9.2 million deficit in 2012-13 and its $15.2 million deficit the following year, Naylor said it is imperative for the district to reach agreements with its employee unions on concessions that would lower the district's expenses.

"Starting now, you have to make further reductions for 2012-13 and 2013-14," Naylor said. "The district needs ... to immediately figure out how it's going to resolve its deficit spending."

Without those further reductions, and if all current financial conditions remain unchanged, the district projects that its reserve for deficit spending will shrink from its balance of $28.2 million to $3.8 million in two years. At that rate, Naylor said, the district would be broke in 2014-15.

Jason Willis, Stockton Unified's outgoing chief financial officer, said the blame for the district's financial predicament falls on the state.

"The board has done its work," Willis said, but California "refuses to fund public education."

Stockton Unified's new budget still must receive approval from the county Office of Education. The district for months has carried a "qualified" financial certification from the county, a notch below the desired "positive" rating. The qualified certification led to Naylor's hiring by the county office as a financial adviser for Stockton Unified.

Critter's Crap: How Bad Is The Budget Deficit?

It is so bad, that if we do nothing, the "deficits will disappear entirely by the end of President Obama's second term ".  That's right.  DO NOTHING!  In other words, let the Bush Tax Cuts expire.  Let them expire and the deficit is projected to disappear by 2016.  We don't need to cut Social Security.  We don't need to cut Medicare.  Hell, we don't even need to get out of three wars and cut the defense budget!  Simply let the Bush tax cuts expire.

I think that deficit is, to a certain degree, also a spending problem (in addition to it being a revenue problem). Those 2 wars have cost the treasury 2 billion dollars and counting. And, while, yes, if we eliminated the Bush tax cuts completely, that indeed would take care of it on paper. I'm just worried that a tax hike on the working and middle class would represent a major drag on overall demand in a still quite fragile recovery. In my opinion, a balance approach along the lines of the deficit commission would probably be the best one.

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