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The Governmental Accounting Standards Board has dropped a bombshell with preliminary new rules that, if adopted, would force governments to increase projections of pension liabilities by using tighter "discount rates" – effectively, lower assumptions of pension fund earnings.
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How Jerry Brown or Meg Whitman would resolve the state's fiscal crisis is not merely an academic question. There's about a 99.9 percent chance that when one of them receives the keys to the governor's Capitol suite, the budget problem will be at least as big as it is now – and will probably be bigger.
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The governor has a state budget that his fellow Republicans more or less support. Assembly Democrats have a budget whose centerpiece is a complex scheme to borrow billions of dollars. And Democratic senators have a budget that's based on raising taxes and shifting some programs from the state to counties.
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Many of the programs are already delivered by counties but paid for through state coffers. Senate Democrats see their changes as a more appropriate "realignment" of services and costs over the next four years.
Their plan would not cut taxpayer costs but give counties new forms of revenues to pay for the added responsibilities. The state would approve a tax on oil production, permanently extend the state's higher vehicle license fee rate and delay corporate tax breaks. It would also give counties greater authority to seek local tax hikes from voters.
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Brown and Whitman criticize the dysfunction gripping the Capitol in the usual budget stalemate. But neither has taken the risky steps of offering a solution to closing the $19.1-billion deficit.
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