Fiscal cliff deal brings some relief to California
The changes "seem like they're small or affecting just a small number of people, but each one of these things has an impact and it can multiply throughout the economy," Ritter-Martinez said.
State experts said it will take weeks to study the impact of the federal legislation on California's economy and state budget.
The nonpartisan Legislative Analyst's Office warned that California also could have lost as much as $11 billion in tax revenue if the nation fell back into recession. That would wipe out the bulk of tax gains under Proposition 30, a set of temporary sales and income taxes hikes voters approved in November.
The state relies heavily on high-income earners, who now will be hit with multiple tax increases — at the state level under Proposition 30 and on the federal level because of the expiring Bush-era tax cuts. The analyst's office had projected a much smaller deficit of $1.9 billion for the next fiscal year on the assumption that Washington would avoid the fiscal cliff.
Additional data will be available as taxpayers make estimated payments this month and begin filing final returns or making extension payments between now and April.
"It will take months, in other words, to understand this aspect of the fiscal cliff better," said Deputy Legislative Analyst Jason Sisney.
On Wednesday, the California Employment Development Department said the state should be able to avoid an interruption to unemployment benefits if federal lawmakers don't make any significant changes.
Dr. Paul Phinney, president of the California Medical Association, said the fiscal cliff deal brought a mixed blessing to physicians, a vast majority of whom accept Medicare.
"We're pleased that they did that but the last-minute deals like this are really disruptive to practices and to continuity of care," Phinney said. "There are a lot of physicians that have spent the last several weeks trying to figure out what they were going to do if these cuts would have gone into effect."
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