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May 17, 2004 - The state's near-term fiscal picture has improved significantly as a result of an improved revenue outlook and the one-time receipt of funds. Despite this improvement, the state's long-term fiscal outlook relative to the January budget plan has worsened. The May Revision plan misses an opportunity to make further progress toward eliminating the state's long-term structural imbalance.
March 19, 2004 - Presented to San Mateo Town Hall on March 18, 2004.
March 17, 2004 - The annual quiz that tests your knowledge of our 1400 page Analysis of the Budget Bill and Perspectives and Issues.
February 18, 2004 - In this piece, we present options for the Legislature's consideration. We have identified expenditures that may be considered of lower priority in tough budget times. It is not that these activities are without merit or not desirable. In better fiscal times we would not necessarily put such options on the table. However, we offer them in the context of a need to solve a massive budget shortfall. We have also identified selected revenue options for the Legislature's consideration. These options generally involve tax expenditure programs which are either inefficient at achieving their objectives or are not the most efficient means of doing so.
February 18, 2004 - The Constitution gives the Legislature the power to appropriate funds. In order to address unexpected expenses (or "deficiencies") that arise during a fiscal year, the Legislature provides the administration with limited authority to spend at higher rates than foreseen in the budget act. The use of this deficiency process, however, has a history of problems—from being used to establish new programs with no statutory authority to serving as an alternative to the normal state budget process. Given this history, we outline a framework for legislative consideration which identifies a new approach to meet unexpected expenses. In our view, this framework would continue to allow necessary adjustments, while better protecting the appropriation authority of the Legislature.
February 18, 2004 - The basic budget problem currently facing the state involves an unfunded gap of slightly over $17 billion. Most of this—$15 billion—represents an ongoing projected structural imbalance between current-law revenues and expenditures in 2004-05 and beyond. A key element of the Governor's plan is the assumed approval of a $15 billion economic recovery bond on the March 2004 statewide ballot to pay off the accumulated 2002-03 budget deficit and help address the remaining budget shortfall. Our own evaluation of the proposal indicates that even if all of its elements were adopted, 2004-05 would end with a General Fund deficit of $0.8 billion. We further project that an ongoing General Fund structural deficit of close to $7 billion would exist beyond the budget year, absent corrective action.
February 18, 2004 - The U.S. and California economies are entering 2004 with significant momentum which we believe will continue through the budget year. The one major exception to the generally upbeat economic picture is employment growth, which continues to lag despite major gains in consumer and business spending and output in the economy. The lack of job growth has not held back the recovery so far, but continued softness in this key area could undermine consumer and business confidence, spending, and ultimately at some point in the future, the overall economic expansion.
February 18, 2004 - We discuss several of the most significant spending proposals in the budget including suspension of the Proposition 98 minimum education funding guarantee, fee increases in higher education, proposals intended to reduce expenditures for health and social services programs, criminal justice system reforms, and actions in transportation redirecting $2 billion to the General Fund.
February 18, 2004 - The Governor's budget proposes total spending in 2004-05 of $97.2 billion, including $76.1 billion from the state's General Fund and $21.1 billion from its special funds. We examine historical spending in relation to the state's economy, spending by program area, and spending adjusted for population and inflation.
February 18, 2004 - 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.
January 13, 2004 - We believe that the Governor's proposal provides a solid starting point for budget deliberations. It includes realistic revenue and caseload assumptions, as well as real and ongoing solutions from most areas of the budget. At the same time, however, it presents the Legislature with numerous policy issues and concerns. For example, its reductions would have far-reaching consequences for the scope of state services in a variety of program areas. Some of its proposals lack detail or have savings estimates that may not be achievable. And, even with the serious spending reductions it proposes in 2004-05 the plan does not fully address the state's ongoing budget problem—leaving a roughly $6 billion shortfall between expenditures and revenues in 2005-06.
November 20, 2003 - Handout presented to the Senate Budget and Fiscal Review Committee on November 20th, 2003.