California Still Borrowing Despite Nationwide Trend and Surpluses in 42 States

Poor Gray Davis got nailed at the wrong time and it wasn’t just the mischief Enron and others engaged in with our energy prices. USA Today reports “The sharp decline in borrowing could mark the end of a four-year period in which states borrowed record amounts of money to support spending increases in a time of weak tax collections.”

Things are so rosy that 42 states actually are running surpluses. Across the country, state and local taxes rose 10.2% last year alone.

As to our state:

“California. The state borrowed $800 million in the first three months of the year, down from $2.2 billion a year earlier. The state is still running a shortfall of about $5 billion a year, but hefty tax collections have reduced the state's borrowing needs by half.”

Remember all of this when politicians take credit for the California’s economy, reduction of our deficit (it’s still a deficit), and talk about the rise in revenue in our state.