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October 24, 2014 - This infographic presents information about the current state budget (2014-15) and compares the level of spending and revenues assumed in the current budget to historical levels since 1950-51. As a share of personal income—one broad measure of the size of the California economy—state spending has been relatively flat since the late 1970s. Spending on health and human services and corrections programs has generally increased over the period, while spending on higher education and transportation programs has generally decreased. Since 1950-51, the personal income tax has replaced the sales and use tax as the predominant source of General Fund revenue.
October 13, 2014 - The LAO’s annual California Spending Plan publication details the 2014-15 budget package, including legislative and gubernatorial actions through October 2014. (An initial version of this publication was released in early August 2014. This final version of the publication also reflects later legislative and gubernatorial actions concerning the budget.) The 2014-15 state spending plan includes large funding increases for schools and community colleges, makes targeted augmentations in other areas of the budget, and pays down several billion dollars in key liabilities. In particular, the budget package includes a plan to fully fund the teachers’ pension system within about 30 years.
September 4, 2014 - Statements of legislative intent and requests for studies adopted during deliberations on the 2014-15 budget package.
May 16, 2014 - On May 13, 2014, the Governor released the 2014-15 May Revision to his annual budget proposal. The package continues to build reserves and pay down debts, including a new proposal to fund the teachers' pension system over about 30 years. Our May revenue forecast projects $2.5 billion higher revenues compared with that of the administration—not substantially different given the size of the state budget. In addition, we project over $700 million more in local property taxes for school districts. If the Legislature were to adopt our office's higher revenue forecast and property tax estimates, General Fund spending under Proposition 98 would increase $2.7 billion, relative to the administration's May forecast. Assuming that the administration's non-Proposition 98 spending estimates are accurate, this would leave around $500 million available for building reserves, paying down more debts, and/or other state priorities.
May 7, 2014 - This report categorizes and provides information about $340 billion in California's key retirement, infrastructure, and budgetary liabilities. In addition, this report provides a framework for the Legislature to consider in prioritizing repayment of these liabilities and makes recommendations on which liabilities to pay down first and how the state could address such costs in the future. In general, we suggest that the Legislature prioritize actions to pay down those liabilities (1) with relatively high interest rates or (2) that result in benefits for groups or entities other than the state government. Due to its massive unfunded liability and relatively high growth rate, we recommend that the Legislature make a full funding plan for the California State Teachers' Retirement System a top priority in addressing the state's key liabilities.
April 28, 2014 - Presented to the Legislature, this handout summarizes the key features of ACA 4—the rainy-day fund proposal currently on the November 2014 statewide ballot—and the Governor’s proposal for a different rainy-day fund mechanism. Revenue volatility presents a key challenge for state budgeting and the state has a poor track record of setting aside reserves when times are good to help balance the budget during later economic downturns. Designing another budgetary formula for the constitution involves implementation issues for legislative consideration.
March 19, 2014 - In this presentation to the Senate and Assembly public employment committees, we discuss the relationship between a CalSTRS funding plan and Proposition 98, the minimum annual amount of funding required for schools and community colleges in California. Addressing the pension system's large unfunded liabilities likely will require additional payments by the state, districts, and teachers over the next several decades. The presentation discusses a possible "grand bargain" for funding CalSTRS benefits in the future.
February 27, 2014 - Presented to the Senate Committee on Budget and Fiscal Review, this handout summarizes the key features of ACA 4—the rainy-day fund proposal currently on the November 2014 statewide ballot—and the Governor’s proposal for a different rainy-day fund mechanism. California’s state tax system is highly volatile, and the state has a poor track record of setting aside reserves when times are good to help balance the budget during later economic downturns. Designing a constitutional rainy-day fund mechanism, however, involves many complexities that require detailed consideration by the state’s leaders.
January 13, 2014 - On January 9, the Governor presented a budget package with a proposed $2.3 billion reserve at the end of 2014-15. The Governor's budget seeks to address some of California's biggest budget issues. The Governor's emphasis on debt repayment is prudent, and his proposal for a new rainy-day fund requirement underscores the importance of regular state contributions to a larger budget reserve. Overall, the Governor's budget plan would place the state on an even stronger fiscal footing.
January 1, 2014 - A list of reports on the 2014-15 budget.
November 20, 2013 - The 19th annual edition of the LAO's Fiscal Outlook--a forecast of California's state General Fund revenues and expenditures over the next six years--reflects continued improvement in the state's finances. A restrained budget for 2013-14, combined with our updated forecast of increased state revenues, has produced a promising budget situation for 2014-15. Our forecast indicates that, absent any changes to current laws and policies, the state would end 2014-15 with a multibillion-dollar reserve. Continued caution is needed, however, given that these surpluses are dependent on a number of assumptions that may not come to pass. For example, as we discuss in this report, an economic downturn within the next few years could quickly result in a return to operating deficits. In this report, we outline a strategic approach for allocating potential surpluses that prepares for the next economic downturn while paying for past commitments, maintaining existing programs, and making new budgetary commitments incrementally to address other public priorities.
November 4, 2013 - The LAO’s annual California Spending Plan publication details the 2013-14 budget package, including legislative and gubernatorial actions through October 2013. (Our office released a preliminary electronic version of the report on July 30, 2013 that summarized legislative and gubernatorial actions through that date.) Major features of the 2013-14 budget plan include $2.1 billion for a new formula to distribute funding amongst schools, a state-based plan to expand Medi-Cal to cover more than one million additional low-income adults, and selected program augmentations.
August 29, 2013 - Presented to: Senate Budget and Fiscal Review Committee
August 15, 2013 - Statements of legislative intent and requests for studies adopted during deliberations on the 2013-14 budget package.
May 31, 2013 - Presented to: Budget Conference Committee