(May 15, 2006) The revised budget plan released by the Governor last week demonstrates the importance of a strong economy to the state's finances, California Chamber of Commerce President Allan Zaremberg is emphasizing.

“Governor Schwarzenegger’s revised budget reflects the strong economic growth his fiscal policies have allowed,” said Zaremberg. “The Governor’s leadership of successful workers compensation reform, and his efforts to get the state’s fiscal house in order by reducing the structural deficit without raising taxes, have paid off for California. More than 500,000 new jobs have been created since the Governor took office and annual revenues have increased by record amounts - from $74 billion to $94.3 billion. It is these tax revenues, resulting from jobs and economic growth, that allow the state to fund essential programs, such as education, transportation, public safety and health care. Clearly, it is far better to raise government revenues from increased economic growth than from increased taxes.”

The May revision of the Governor's budget plan totals $131.1 billion and takes into account an increase in projected revenues since the Governor first released his proposal for 2006-07 state spending in January. The additional revenue is expected to total $7.5 billion over two years - $4.8 billion in the current budget year and another $2.7 billion next year.

“California must be fiscally responsible with these additional revenues and not repeat the mistakes of the past. I applaud the Governor for proposing to use much of these additional revenues to pay down billions of dollars of state debt and to establish a prudent reserve. This early repayment of state debt - including money borrowed from the Proposition 42 transportation fund - will improve our state’s fiscal footing for more difficult budgets ahead. And the rainy-day reserve will prepare the state for impending court judgments or unforeseen emergency needs. This is an excellent use of revenues that may not be repeated every year.”

Governor Arnold Schwarzenegger’s May budget revision.