Failure to avoid the ‘fiscal cliff’ could delay the state’s recovery and cost it $11 billion in tax revenue. Funds to hire police officers and affordable housing money could be victims as well.

By Chris Megerian, Los Angeles Times
November 23, 2012

SACRAMENTO — Just as California’s finances seem to be getting back on track, experts warn that the federal budget standoff could delay the state’s economic recovery and cost it $11 billion in tax revenues.

If President Obama and Congress fail to reach a deal by the end of the year, the resulting tax hikes and spending cuts could send the country into another recession. California tax revenues could lag nearly 6% over the next year and a half, according to the state Legislative Analyst’s Office, nearly wiping out any gains from Proposition 30, the tax-hike plan pushed by Gov. Jerry Brown and approved by voters this month.

California also would receive less federal funding, and the state could end up wrestling with more deficits at a time when the nonpartisan analyst had forecast surpluses.

“This would be a bad turn of events,” said Jerry Nickelsburg, senior economist at the UCLA Anderson School of Management. “It would delay the recovery in California.”

And the consequences would reverberate throughout the state, from Sacramento down to local parks and police departments.

On the federal chopping block are Justice Department grants that help hire police officers. So is funding from the Department of Housing and Urban Development for community programs and affordable housing.

“With all the other cuts that we’re making, it’s something we’re definitely going to feel,” said Jennifer Whiting, a lobbyist with the League of California Cities.

In the last year, $24.4 million in federal money was used to hire 119 police officers in California, including 25 in Los Angeles.

Local governments also received $482.6 million for community development and affordable housing. Glendale, for example, used its grants for after-school programs, increasing energy efficiency and renovating a park with a basketball court and picnic area.

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