by Calculated Risk on 12/18/2011 09:42:00 AM

There are more budget cuts coming in California, but the cuts may be nearing the end. The ongoing state and local budget cuts have been a significant drag on economic and employment growth for the last several years.

From the San Francisco Chronicle: California leaders say time for cuts may be ending

General fund spending has dropped by $17 billion since 2007 - from a high of nearly $103 billion - and the cuts continued as recently as last week ... [and Gov. Jerry Brown] warned the bad news wasn't over: Next month he'll unveil a budget proposal with yet more spending cuts.

... in the past year, the governor and lawmakers have put a significant dent in the problem. In November 2010, the Legislative Analyst's Office projected that California would have budget deficits of around $20 billion per year over the next five years if the governor and Legislature did not take decisive action. ... Last month, the legislative analyst projected future deficits at under $6 billion per year ... More action is sure to come. Brown last week said he would propose billions more in spending cuts when he proposes a budget next month for the year beginning July 1.

In addition to that, voters will be asked in November whether to approve tax increases worth $7 billion per year over the next five years, including in the next fiscal year.

State and local governments have cut 227,000 payroll jobs this year through November, after cutting 249,000 jobs last year - and more cuts are coming. And state and local governments have been a drag on GDP for four consecutive years, subtracting about 0.3% from GDP growth this year (through Q3). There is more cutting ahead, but the pace of cutting should slow in 2012 - and there will be less drag on GDP and employment.

Earlier:
• Summary for Week ending Dec 16th
• Schedule for Week of Dec 18th