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May 18, 2012 - In the May Revision of his 2012-13 budget proposal, the Governor identified a larger budget problem of $15.7 billion for state leaders to address in the coming weeks. While we find that the administration's economic and revenue forecasts are reasonable, we are concerned that the amount of property tax revenues from former redevelopment agencies (RDAs) may be substantially less than the May Revision assumes in 2011-12 and 2012-13. If so, this could increase the state's Proposition 98 school funding obligations and, therefore, the size of the budget problem above administration estimates. Moreover, the administration's $1.4 billion estimate for the amount of General Fund benefit that may be achieved in 2012-13 from transferring former RDAs' liquid cash assets to school districts is highly uncertain. We advise the Legislature to focus on adopting realistic and ongoing budget actions to continue the progress the state has made in reducing its annual operating, or structural, deficit. We describe and assess the administration's major May Revision proposals. In some cases, we offer alternative ways to achieve the savings targeted by the Governor. With regard to Proposition 98, we offer alternatives to both the Governor's basic budget plan and his trigger plan.
February 27, 2012 - There are plenty of mixed signals in economic data for California’s policymakers, as they continue to craft state and local budgets in a constrained fiscal environment. The economy now is clearly improving in many important ways, including employment growth, but significant impediments block the state’s path to a more robust economic recovery. Like the economic data, reports concerning state revenues have been mixed recently too, with weakness in income tax payments accompanied by speculation concerning a future bonanza of tax revenues due to the possible offering of stock by Facebook, Inc. This report provides our updated projections concerning these and other trends in the economy and state revenues.
February 22, 2012 - Presented to the Assembly Accountability and Administrative Review and Assembly Revenue and Taxation Committees
February 5, 2012 - We will release publications aimed at addressing the 2012-13 budget situation. These will include all major areas of the budget, including Proposition 98 and K-12 Education, Higher Education, Health, Social Services, Resources, Transportation, and Criminal Justice.
January 11, 2012 - The Governor’s proposed tax initiative is the cornerstone of his 2012-13 budget plan, which includes proposals to restructure education finance, reduce social services and child care programs substantially, and implement trigger cuts--primarily affecting schools--if voters do not approve the tax measure. The Governor’s plan would continue the difficult task of restoring the state budget to balance, but the difficulty in knowing how much taxable income will be attributable to high-income Californians makes the state’s revenue estimates an even bigger question mark than usual. With regard to the Governor’s major proposals, we think the Governor’s education restructuring proposals would institute lasting improvements to the system, and we observe that, while his social services and child care proposals have merit, they involve considerable drawbacks as well, given potentially severe impacts on affected families. Moreover, while the Governor’s tax initiative would improve the financial outlook of public education over the next several years, his trigger plan would create significant uncertainty for educational institutions in their planning for 2012-13. The Legislature needs to be very deliberate in structuring a workable trigger package and designing tools to help schools respond to potential trigger cuts.
December 5, 2011 - Presented to Assembly Revenue and Taxation Committee
November 17, 2011 - Presented to theAssembly Select Committee on Government Efficiency, Technology and Innovation and the Assembly Budget Subcommittee No. 4 on State Administration
October 27, 2011 - California’s Budget Woes: How Is Our Fiscal Health? Presented at the Randall Lewis Seminar Series, University of California, Riverside. October 27, 2011.
October 19, 2011 - Alternative Energy Manufacturing Sales and Use Tax Exclusion (SB 71) Program
September 29, 2011 - An Overview of Federal Funding in California
August 11, 2011 - The 2011–12 state spending plan includes total budget expenditures of $120.1 billion from the General Fund and special funds. This consists of $85.9 billion from the General Fund and $34.1 billion from special funds. While General Fund spending has dropped by around 6 percent from 2010–11, this has, in part, been offset by increases in special fund spending as the state shifts some programs—from state to local responsibility under what has been called "realignment"—from General Fund support to special fund support. Federal funds spending continues to decline with the expiration of much of the funding made available through the American Recovery and Reinvestment Act.
July 5, 2011 - We will not publish a Major Features report in 2011. Instead, in early August we will release The 2011-12 California Spending Plan, which will provide similar information, but in much more detail. Until then the link below points to a 7 page July 1, 2011 handout titled Summary Tables 2011-12 Budget Package.
July 1, 2011 - Summary Tables 2011-12 Budget Package
May 19, 2011 - Mac Taylor speaks to the media about the LAO report "The 2011-12 Budget: Overview of the May Revision."