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March 17, 2006 - Our ninth annual contest to test just how closely the members of the news media are reading our Perspectives and Issues (P&I) and Analysis books is over. This time, the analysts win. The contest rules provided that the first reporter to submit a completed and correct entry by the deadline would win. No correct entry was submitted by noon yesterday, so our hard-working analytical staff at LAO who helped to dream up these questions won this time out. In light of public health concerns over obesity, their prize was an assortment of bagels and muffins from Noah’s Bagels instead of the traditional prize of donuts.
February 23, 2006 - The Governor’s budget proposes to expand the use of formula-based budgeting to the entire Judicial Branch. However, the proposal lacks a clear policy rationale and would likely lead to over budgeting of the courts. We recommend rejection of this proposal.
February 23, 2006 - The administration proposes to switch the Governor’s Office budget from traditional budgeting to an automatic annual adjustment. The change would cost about $1 million annually. The administration has offered no policy reason why the current process is not working. We therefore recommend that the Legislature reject the proposal to put the Governor’s Office budget on autopilot spending.
February 23, 2006 - The Governor’s budget assumes that proposed authority for the administration to reduce departmental budgets during the year will decrease overall state costs by $258 million. Since 2002-03, enacted budgets have included similar provisions. In reality, however, the full magnitude of these savings is rarely achieved. We recommend that the Legislature delete the proposed authority. The administration should identify any specific proposed savings in departmental budgets during the spring budget process.
February 23, 2006 - Our annual detailed examination of the Budget Bill based on the Governor's Budget. It includes hundreds of findings and recommendations related to education, health and social services, criminal justice, transportation, resources, capital outlay, information technology, and local government.
February 22, 2006 - California has benefited greatly from over $11 billion in unanticipated increases in state revenues. Yet, due to its allocation of these funds, the 2006-07 Governor’s Budget would still leave the state with large structural budget shortfalls and an enormous amount of outstanding financial obligations. In this regard, the budget proposal misses an important opportunity to take advantage of highly favorable revenues to get the state’s fiscal house in order. We thus recommend that the Legislature reduce the amount of ongoing spending increases proposed in this budget, and use the savings to either increase reserves or pre-pay additional budgetary debt.
February 22, 2006 - California has benefited greatly from an over $11 billion three-year revenue increase since the 2005‑06 budget was enacted; yet, the Governor’s budget plan would still leave the state with major structural budget shortfalls and a large amount of other financial obligations outstanding. In this regard, we believe the proposal misses a real opportunity to finally get the state’s fiscal house in order by meaningfully addressing what is still a formidable fiscal problem.
February 22, 2006 - Despite a slowdown in the final quarter of the year, the U.S. and California economies generally outperformed expectations in 2005, shrugging off soaring energy costs, rising interest rates, and the impacts of three major hurricanes on Gulf Coast states. Recent monthly data on spending, employment, and production suggest that the softness that occurred in late 2005 will be short-lived, and the economy will expand at a moderate pace in 2006 and 2007. This outlook is subject to significant downside risks, however, associated with the potential for further increases in energy prices and steeper-than-expected declines in the real estate market.
February 22, 2006 - We discuss several of the most significant spending proposals in the budget. For more information on these spending proposals, and our findings and recommendations concerning them, please see our analysis of the appropriate department or program in the Analysis of the 2006-07 Budget Bill, available February 23rd, 2006.
February 22, 2006 - The Governor’s budget proposes total spending in 2006‑07 of $122.9 billion, including $97.9 billion from the state’s General Fund and $25 billion from its special funds. This total budget-year spending is $7.2 billion higher than current-year spending—an increase of 6.3 percent. Of total budget-year spending, General Fund spending accounts for about 80 percent. This proposed spending level translates into $3,268 for every man, woman, and child in California.
January 20, 2006 - If enacted by Congress, the Deficit Reduction Act of 2005 would have a significant fiscal impact on California. We project, based on the provisions which we can estimate at this time, that the fiscal impact of this legislation on California would be $3.1 billion--$1.7 billion in reduced federal funds and $1.4 billion in increased state costs-during federal fiscal years 2006 through 2010. These amounts are preliminary estimates and do not reflect potentially significant secondary effects. In this report, we review the major provisions of this legislation, estimate the fiscal impact on federal funds and state funds based on current law, and identify key issues for legislative consideration.
January 12, 2006 - The 2006-07 Governor’s Budget now projects that the state will be able to fund much more than a current-law budget and still maintain fiscal balance in 2006-07. The plan, however, moves the state in the wrong direction in terms of reaching its longer-term goal of getting its fiscal house in order. Given the state’s current structural budget shortfall, we believe that the 2006-07 budget should focus more on paying down existing debt before making expansive new commitments.
November 16, 2005 - The state's budget outlook for 2006-07 and beyond has improved considerably as a result of a major increase in revenues and significant savings adopted in the 2005-06 budget plan. The state, however, still faces major operating deficits in the next several years.