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May 19, 2011 - Significantly improved General Fund revenue trends since January and over $13 billion of budget actions already approved by the Legislature have reduced the size of the budget gap still to be addressed by California’s elected leaders. The administration identifies a $9.6 billion remaining budget problem based on generally reasonable 2010-11 and 2011-12 revenue and expenditure assumptions. The Governor’s plan to address this shortfall and leave the state with a $1.2 billion reserve at the end of 2011-12 has many positive aspects. It would help bring annual spending and resources much closer in line for the next five years, and its focus on reducing budgetary debt obligations is laudable. On the other hand, the Legislature has other options to address the reduced budget shortfall, including adoption of alternative tax proposals, additional program reductions, and selected fund transfers and internal borrowing. The improved economic and revenue situation, along with significant budgetary solutions already adopted, mean that California now is in a position to dramatically shrink its budget problem with a focus on ongoing budget solutions.
January 25, 2011 - Recently, the Legislature enacted a package of changes known as the “fuel tax swap” to achieve General Fund relief. However, the passage of ballot measures in November 2010 potentially undoes portions of the tax swap package. In response to these ballot measures, the Governor’s January 2011-12 budget proposes statutory changes to recapture the use of transportation funds to help balance the state’s budget. In this brief we describe and evaluate these recent changes and the Governor’s proposal. We also provide additional options that the Legislature may wish to consider that offer more solutions to achieve General Fund relief.
January 19, 2011 - We will release several reports aimed at addressing the 2011-12 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 18, 2011 - The 2011-12 Governor’s Budget proposes to dissolve redevelopment agencies and shift the revenue to other state and local programs. In this initial overview we provide background on redevelopment agencies, assess the Governor’s proposal, and provide some additional issues for the Legislature to consider.
January 13, 2011 - In this ten minute video, Legislative Analyst Mac Taylor discusses the building blocks that comprise California's state budget including the difference between general and special funds, major sources of revenue, and the largest categories of expenditure.
January 12, 2011 - Legislative Analyst Mac Taylor speaks with the media about the LAO's report The 2011-12 Budget: Overview of the Governor’s Budget.
January 12, 2011 - The Governor's proposed budget plan addresses an estimated $25.4 billion state budget problem—consisting of an $8.2 billion deficit that would remain at the end of 2010-11 absent additional budgetary action and an estimated $17.2 billion gap between current-law revenues and expenditures in 2011-12. We believe the Governor's proposal is a good starting point for legislative deliberations. It includes reductions in nearly every area of the state budget and a package of revenue proposals that merit serious legislative consideration. We credit the Governor's efforts to craft a budget plan that focuses on multiyear and ongoing solutions, and his proposals to realign state and local program responsibilities and change local economic development efforts have much merit. Still, there are some significant risks in his plan and some optimistic savings assumptions. There is significant work ahead to fill in the details of some of the Governor's ambitious, complex proposals, particularly given his proposed accelerated timeline for budget deliberations and a June special election concerning extensions of tax increases.
December 10, 2010 - Presented to: Hon. Robert Dutton, Senator, 31st District.
December 7, 2010 - On December 6, 2010, Governor Schwarzenegger declared a fiscal emergency and called the new Legislature into special session to address the anticipated 2010‑11 General Fund deficit—estimated by our office at $6.1 billion. The Governor’s special session proposals would decrease the gap between General Fund revenues and expenditures by $1.9 billion in 2010‑11 and by $8 million in 2011‑12, thereby reducing the $25.4 billion budget problem that we have identified to $15.5 billion. The Governor's proposals consist of $7.4 billion of expenditure-related reductions and two major revenue proposals. Essentially all of these proposals were rejected earlier this year by the prior Legislature. The Governor also proposes to transfer vehicle weight fee revenues to the General Fund. This would achieve an estimated $850 million in budget solutions in 2010‑11 and $727 million in 2011‑12 by reimbursing the General Fund with weight fee revenues for certain transportation bond debt service costs, and also loaning a portion of the weight fee revenues to the General Fund. Under the proposal, the fuel tax revenues that would have helped the General Fund prior to Proposition 22 would now be available for transportation programs.
November 10, 2010 - Three short webcasts summarizing our 2011-12 Fiscal Outlook publication. Includes: (1) Overview, (2) Revenue and Economic Outlook, and (3) Proposition 98.
November 10, 2010 - Our forecast of California’s General Fund revenues and expenditures shows that the state must address a budget problem of $25.4 billion between now and the time the Legislature enacts a 2011‑12 state budget plan. The budget problem consists of a $6 billion projected deficit for 2010‑11 and a $19 billion gap between projected revenues and spending in 2011‑12. Similar to our forecast of one year ago, we project annual budget problems of about $20 billion each year through 2015‑16. We continue to recommend that the Legislature initiate a multiyear approach to solving California’s recurring structural budget deficit. In 2011‑12, such an approach might involve $10 billion of permanent revenue and expenditure actions and $15 billion of temporary budget solutions. In 2012‑13, 2013‑14, and 2014‑15, another few billion of permanent actions each year could be initiated, along with other temporary budget solutions, and so on until the structural deficit was eliminated.
November 4, 2010 - The 2010–11 state spending plan includes total budget expenditures of $117.4 billion from the General Fund and special funds. This consists of $86.6 billion from the General Fund and $30.9 billion from special funds. While this level of budgeted General Fund spending is far below the $103 billion recorded in 2007–08, it is $203 million—0.2 percent—higher than in 2009–10. Spending from special funds, however, is budgeted to be $7.5 billion—32.3 percent—higher than in 2010–11, driven mainly by recent changes in Medi–Cal and transportation funding that were enacted in part to offset costs in the General Fund. In addition, the budget assumes spending from bond funds of about $8 billion as the state continues to allocate moneys from the $43 billion bond package approved at the November 2006 election. The budget plan (including gubernatorial vetoes) includes the following actions: $7.8 billion of expenditure–related solutions; $5.4 billion of new federal funding; and $3.3 billion of revenue actions.