Tackling the Californian deficit

After the longest budget stand-off on record, California passed an $86.6 billion spending plan in October. However, the most populous US state faces continuing challenges, including a large structural deficit and widening pension fund shortfalls. State treasurer Bill Lockyer talks to Mark Pengelly

Tackling gaping deficits has become a major focus for governments across the globe over the past year, prompting many to unleash severe austerity programmes to get spending under control. The state of California has had more practice than most in dealing with this issue, having racked up a deficit over the past few years that would make many governments wince.

The state faced a $24.3 billion budget gap in 2008 – a figure that swelled to $60 billion in 2009. On both occasions, disagreements over