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8A Page 9 Simply put, the state's total expenses exceed the resources it has available to spend. Whatever fix the Governor and legislators may agree upon to balance the budget, a significant factor in the state's deficit is mainly the shrinking state general fund revenues, exacerbated by deteriorating economic conditions natio!'ally and worldwide. The Department of Finance calculates a $31 billion discrepancy between the estimated revenues for the budget years 2007-08,2008-09,2009-10, and actual revenues received. More than $17.7 billion of that amount is attributable to declining personal income tax revenue, about half of which is associated with reduced capital gains, the other half due to changing economic conditions. About $5.9 billion results from a decline in sales and use tax revenue, caused by reduced disposable income among taxpayers and fewer auto sales, as well as reduced transfers to transportation funds due to lower forecasted gas prices. About $4.9 billion of the loss results from reduced corporation franchise and income tax receipts. due to declining corporate profits. Another $1.3 billion is due to declining property tax revenues. Behind these cold numbers are three culprits: . Job Losses. Between June and October 2008, the state lost 47,100 jobs - an average of 15,700 job losses per month, and a tripling of the 5,200 monthly job losses occurring in the first five months of the year. While modest job gains were seen in health services, government, leisure and hospitality, education, and natural resources and mining, job losses occurred in major industry sectors such as trade, transportation, utilities, professional and business services. manufacturing, construction, financial activities and the information sectors. The state unemployment rate hit 8.2 percent in October, the highest since September 1994, and the largest year-aver-year increase since December 1982. . Construction Hit Hard. Residential permits were down 48 percent from October 2007 to October 2008, as the fifth consecutive month-over decline hit the industry, recording the lowest level of activity in decades. Single-family permits were down 44 percent, while multi- family permitting was down 53 percent. Slowing office and retail construction led to nonresidential construction permits falling 36 percent in October from a year earlier, making the month the weakest since February 2004. . Home Sales. Weakening home prices contributed to increase in the numbers of existing home sales in October - more than twice the rate of sales posted a year earlier. However, the median price of existing, single-family homes sold was 40 percent less than last year. Need More Information? For more information on how California got to where it is today, please view the following documents from the Department of Finance Web site: . General Fund Workload Revenue Forecast http://www.dof.ca. Qov/budaetlhistoricaI/2008-09/documents/G F Workload Rev. pdf . Department of Finance Bulletin, December 2008 http://www.dof.ca ,aov lfi nance bulletins/2008/December/documents/Dec-08 _ doc Bipartisan Commission to Review California's Outdated Revenue Laws On Oct. 30, 2008, Gov. Arnold Schwarzenegger signed Executive Order S-12-08 to create the bipartisan commission on the 21st Century Economy, tasked with reviewing California's 80 year- old revenue-gathering laws and making recommendations on how to modernize them. The commission consists of 12 members - six appointed by the Governor, three by the Speaker of the Assembly, and three by the Senate President pro Tern. They will meet on Jan. 22 in San Diego for the first time. The commission will deliver a report with recommendations on or before April 15, following three consecutive meetings scheduled for Feb. 12 in Los Angeles, March 10 in Berkeley, and April 9 in Davis. The meetings are open to the public. The commission will consider how to: . Establish a 21 st century tax structure that fits with state's 21 st century economy; . Stabilize state revenues and reduce volatility; 3