Ann Hollingshead
(916) 319-8305
State Budget and Federal Funding
Carolyn Chu
(916) 319-8326
Chief Deputy Legislative Analyst


State Budget Condition

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State Fiscal Picture 2006-07

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.


Perspectives on the Economy and Demographics 2006-07

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.


Major Expenditure Proposals in the 2006-07 Budget

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.


An Overview of State Expenditures 2006-07

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.


Highlights of the 2006-07 Perspectives and Issues

February 22, 2006 - This document summarizes the major findings in the 2006-07 Perspectives and Issues.


Pending Federal Deficit Reduction Act of 2005: Fiscal Effect on 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.


Overview of the Governor’s Budget: 2006-07

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.


California's Fiscal Outlook: LAO Projections, 2005-06 Through 2010-11

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.


Proposition 76: Key Issues and Fiscal Effects

September 30, 2005 - Proposition 76 on the November Special Statewide Election ballot is a complex measure that would have far-reaching effects on the state budget. In this report, we describe the measure’s key provisions and provide answers to some of the questions that have been raised about its potential impacts on state and local governments. The report has been prepared to facilitate testimony at a legislative joint overview hearing on the measure.


California Spending Plan 2005-06: The Budget Act and Related Legislation

September 23, 2005 - The 2005-06 budget package contains almost $6 billion in solutions, eliminating a shortfall, prepaying some debt, and establishing a $1.33 billion year-end reserve. Despite these actions, the state still takes large operating deficits in 2006-07 and beyond, absent additional actions. This report summarizes legislative action on the 2005-06 budget, including expenditure highlights by program area.


Major Features of the 2005 California Budget

July 26, 2005 - The 2005-06 budget reflects an improving state fiscal picture brought about by better-than-expected growth in General Fund revenues. The new spending plan funds the Proposition 42 transfer to transportation, and includes significant increases in both K-12 and higher education. The new budget does not use any of the remaining $3.7 billion in deficit-financing bonds authorized by Proposition 57 in March 2004, and it prepays a $1.2 billion loan due to local governments in 2006-07. The spending plan includes roughly $6 billion in savings and related budget solutions in order to maintain budgetary balance. The savings included in the 2005-06 budget will address part of the state's ongoing structural budget shortfalls. However, even if all of the savings in the plan are fully achieved, we believe that current-law expenditures will exceed projected revenues by around $6.1 billion in 2006-07.


Supplemental Report of the 2005 Budget Act: 2005-06 Fiscal Year

July 18, 2005 - Statements of intent for requests for studies adopted by the Legislature as a supplement to the 2005 Budget Act.


The 2005-06 Budget Bill, SB 77, As Adopted by the Conference Committee on the Budget

June 15, 2005 - Summary of the 2005-06 Budget Bill (SB 77), as adopted by the Conference Committee on the Budget.


Overview of the 2005-06 May Revision

May 16, 2005 - The May Revision proposes to use about $4 billion in new funds generated from an improved revenue outlook to reduce budgetary debt and restore the Proposition 42 transfer to transportation. We believe the administration’s general approach of using the resources for debt reduction and one-time purposes is sensible in light of the state’s structural budget shortfall. We strongly urge the Legislature to aim at ongoing solutions which are of the same magnitude as the administration’s proposal.


Eighth Annual Budget Analysis Quiz

April 14, 2005 - The annual quiz that tests your knowledge of our 1400 page Analysis of the Budget Bill and Perspectives and Issues!