Budget Deficit

The City Council, voting 3 to 1, has approved a $15.5-million budget that averted a deficit by increasing city fees for street sweeping and trash collection and laying off six workers. Mayor Gail H. Kerry voted against the budget, saying it failed to spend enough money to improve the city's roads and sewer system. The new budget, complained Kerry, also will not allow the Police Department to hire the nine additional staff members it requested.

Gov. George Deukmejian scolded independent state officials and the news media Thursday for creating a "confusing, contradictory" debate over a reported budget deficit that he argues never existed. In his angriest comments yet on the debate over the reported deficit in last year's budget, Deukmejian said in a speech to the California Taxpayers Assn. that talk of the state being in the red "is little more than a bookkeeper's fantasy."

Kansas Sen. Bob Dole returned to his roots in the Midwestern heartland Monday to announce his candidacy for the Republican presidential nomination and to pronounce the federal budget deficit to be "the single greatest threat" to the nation's economic health.

The nation needs to begin planning now to eventually bring taxes and spending into line, Federal Reserve Chairman Ben S. Bernanke said Wednesday, arguing that large budget deficits, if sustained, could deepen the financial crisis and choke off the economy. Bernanke's testimony to Congress reflected growing concern among economists and investors that the nation's long-term fiscal imbalances could hinder economic recovery by driving up interest rates.

The federal deficit hit a new record in the just-completed 2008 budget year under the latest estimates from the Congressional Budget Office. The record $438-billion shortfall for the budget year that ended last week is up from $162 billion posted last year. The previous record of $413 billion was posted in 2004. The CBO said Tuesday that with the economy in a slump, revenues dropped by almost 2%. Corporate income receipts dropped by $65 billion, or nearly 18%.

For weeks, all eyes have been on Washington as Congress and President Bush have wrangled about how to reduce the burgeoning federal budget deficit. Disagreement raged over proposals to raise income taxes for the wealthy, increase Medicare premiums, cut capital-gains taxes and increase taxes on cigarettes, alcohol and gasoline.

Before a standing-room-only crowd, the City Council on Monday unanimously approved a controversial 2% utility tax that the city said is needed to offset a budget deficit estimated at $400,000 to $500,000. The levy, which will bring in an estimated $600,000 to $800,000 a year, will first appear on electric, gas and telephone bills in April. Public opposition to the tax prompted the city to hold two public meetings to explain the need for the tax and solicit opinions and alternative suggestions.

The federal budget deficit declined slightly to $152.1 billion in fiscal 1989, mostly because the government spent only half as much as expected on the savings and loan bailout in August and September, it was announced today. The budget gap for the fiscal year ending Sept. 30 represented a $3.1-billion improvement over the $155.2 billion in red ink recorded in 1988. The deficit had hit a record $221.1 billion in 1986, before declining to $149.

Big federal budget deficits raise risks to the country's long-term economic health and they need to be curbed, Federal Reserve Chairman Ben S. Bernanke said. "The prospective increase in the budget deficit will place at risk future living standards of our country," Bernanke said. "As a result, I think it would be very desirable to take concrete steps to lower the prospective path of the deficit."

The nation's budget deficit sank to a 15-year low of $109 billion in fiscal 1996, two Republican lawmakers said Wednesday. The announcement, claiming congressional credit for the drop and preempting the Clinton administration's planned release of the figure later this month, came from Sen. Pete V. Domenici (R-N.M.) and Rep. John R. Kasich (R-Ohio), chairmen of the Senate and House budget committees. They attributed the figure for the fiscal year that ended Sept.