Still in the Red

California continues to face a structural deficit in the coming years. The nonpartisan Legislative Analyst Office has released a report saying, no surprise here, the out years of the budget aren't looking so hot. The 2005-06 budget contains roughly $2 billion in ongoing budgetary savings. We estimate that these savings, coupled with the prepayment of the VLF gap loan, will reduce the projected 2006-07 operating shortfall between annual current law revenues and expenditures by roughly one-third-from around $9 billion to around $6 billion. The long-term key to bringing the budget back into balance are so-called "ongoing budgetary savings." That means that cuts made this year--or revenue spikes--are permanent. Without such "ongoing solutions", as the lingo goes, the legislature and governor will continue to confront bloated deficits year after year. You can read the LAO's latest report here.