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May 21, 2009 - The Governor's estimate of a new $21 billion budget problem is reasonable. The May Revision proposals include major spending reductions and serious efforts for long–term state efficiencies and savings. By acting quickly and reducing reliance on some of the Governor’s riskiest proposals--such as financing $5.5 billion of the deficit by issuing revenue anticipation warrants--the Legislature can return the budget to balance, prevent another state cash crunch, and preserve core funding for what it deems to be California’s long–term priorities. To accomplish these goals, the Legislature now needs to cut lower–priority programs substantially or eliminate them. To address significant budget deficits forecast in future years, the Legislature also needs to begin work this year on measures that further improve the efficiency of state services for 2010–11 and beyond. (Note: the Appendix in the HTML version was corrected as of 2:30 p.m. on May 21, 2009.)
May 7, 2009 - Jason Dickerson Summarizes California's Cash Flow Crisis in May, 2009.
May 7, 2009 -
In part because state revenue collections have been weaker than expected since passage of the February budget package, major cash flow difficulties loom for California in the summer and fall of 2009. Without significant budget-balancing and cash management actions by the Legislature or unprecedented borrowing from the short-term credit markets, the state will not be able to pay many of its bills on time for much of 2009-10. Returning the budget to balance will be important to resolving the state's cash flow challenges. We recommend that the Legislature act quickly to address these challenges—by late June or early July at the latest. We also note that the state should be cautious about accepting additional federal assistance for the state's cash flow problems, especially given the strings that may be attached to such aid. (Five-minute video summary)
See also: May 22, 2009, Conference Committee Update: California's Cash Flow Crisis
April 2, 2009 - Combined index of the full 14 report 2009-10 Budget Analysis Series.
March 24, 2009 - Presented to UCLA Anderson Economic Forecast Seminar
March 13, 2009 - Mac Taylor's press conference in which he discusses the fiscal outlook under the February 2009 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.
March 13, 2009 - Due to the very serious nature of the state’s fiscal problems and the likelihood that the Legislature will be discussing budget issues on a more accelerated pace this year, we are departing from our traditional approach of publishing our Analysis and our Perspectives & Issues documents. Instead, we will release a series of reports aimed at addressing the 2009-10 budget situation. Most of these publications will relate to specific policy areas: Health, Social Services, Resources, Transportation, Proposition 98 Education Programs, Higher Education, Criminal Justice, and General Government. The final report in the series, The 2009-10 Budget: Perspectives and Issues, will be released on February 18th, 2009.
March 10, 2009 - The recently enacted federal economic stimulus package commits a total of $787 billion nationwide. We estimate that California will receive over $31 billion in monies that can be used to address budget shortfalls and supplement existing state spending and billions more in competitive grants. The recently enacted state 2009-10 budget specifies that if the amount available to address the state's budgetary problems is less than $10 billion, then annual state program reductions of nearly $1 billion and revenue increases of about $1.8 billion will go into effect. Based on the enacted state 2009-10 budget we estimate that $8 billion would be available. Given the state’s continuing economic struggles, however, it may be possible to use additional federal education dollars for budgetary relief. We identify key issues that the Legislature should consider in making decision regarding these new federal funds, including ways to maximize their benefit to the state General Fund and to provide appropriate oversight on the use of the federal monies.
February 26, 2009 - Included are analyses of Propositions 1A through 1F and an overview of the state budget.
February 20, 2009 - Presented to the California County Superintendents Educational Services Association (CCSESA) Chief Business Officers (CBO) conference.
January 14, 2009 - Deputy Legislative Analyst Michael Cohen and Principal Fiscal and Policy Analyst Jason Dickerson the LAO report, California’s Cash Flow Crisis—the second in the LAO’s 2009-10 Budget Analysis Series.
January 14, 2009 - Balancing the budget—by increasing state revenues and decreasing expenditures—is the most important way that the Legislature can shorten the duration and severity of the state’s cash flow crisis. Absent prompt action to begin addressing the state’s colossal budget gap and other measures discussed in this report specifically to help the state’s cash flows, state operations and payments will have to be delayed more and more over time. In the event that the Legislature and the Governor are unable to reach agreement to balance the budget by the summer of 2009, major categories of services and payments funded by the state may grind to a halt. This could seriously erode the confidence of the public—and investors—in our state government. To avoid this, it is urgent that the Legislature and the Governor act immediately to address the budgetary and cash crises that have put the state on the edge of fiscal disaster.
January 8, 2009 - Mac Taylor's press conference in which he discusses the LAO's Overview of the 2009-10 Governor's Budget