Perspectives and Issues (Table of Contents)
2009-10 Budget Analysis Series: The Fiscal Outlook Under the February Budget Package
March 13, 2009
The budget package of $42 billion in solutions adopted by the Legislature and the Governor in February was an impressive step in addressing the state’s monumental budget shortfall. The budget uses both sides of the ledger—revenue increases and spending reductions—to attack the state’s dire fiscal situation. Unfortunately, the state’s economic and revenue outlook continues to deteriorate. Even in the few weeks since the budget was signed, there have been a series of negative developments. Our updated revenue forecast projects that revenues will fall short of the assumptions in the budget package by $8 billion. Moreover, a number of the adopted solutions—revenue increases and spending reductions—are of a short–term duration. Thus, without corrective actions, the state’s huge operating shortfalls will reappear in future years—growing from $12.6 billion in 2010–11 to $26 billion in 2013–14.