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Hollywood Accounting Sacramento-Style

July 30, 2012

Hollywood apparently isn’t the only place in California where creative accounting is known to take place.

State officials were recently embarrassed to discover a $2.3 billion gap between what the state controller’s office had calculated was sitting in hundreds of special funds, and figures reported by the Department of Finance. At least 17 fund accounts appear to show discrepancies, according to the San Jose Mercury News, which used publicly available information on the Web to find the divergences. They include a $113 million discrepancy in a fund for bottle and can recycling, $54 million difference in money in the state parks fund, $30 million in the low-cost child health insurance fund, and $29 million in the violent crime victim restitution fund.

Governor Jerry Brown and the California legislature used the Finance Department’s lower figures, which amount to $8.8 billion less than the individual departments’ numbers, in the budget they approved last month, a budget that incidentally includes a large tax hike.

According to the official budget, there is a $15.7 billion deficit. To balance it, the budget relies on $8.5 billion in new tax revenues, from a quarter-cent sales tax hike for four years, and a seven-year increase in income taxes on taxpayers who earn over $250,000 a year. But voters will need to approve the tax hikes on the ballot in November in order to balance the budget. But with the budget numbers now looking suspect, tax-averse Californians are going to need a lot of convincing.

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