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April 28, 2020 - This post summarizes recent federal legislative and other actions to allocate funding to California and other states in response to the coronavirus disease 2019 (COVID-19). Figures in this post summarize—as comprehensively as was feasible—the amount of funding that we expect to flow to governments and other public entities in California from the federal government. We also describe the major COVID-19-related federal funding that we expect to flow directly to private Californian entities, such as individuals and businesses.
April 20, 2020 - This post summarizes recent legislative and administrative action to allocate state funds to respond to the coronavirus disease 2019 (COVID-19) public health emergency. These activities are ongoing. We plan to update this post periodically to reflect new information and actions.
April 16, 2020 - Presented to: Senate Budget and Fiscal Review Committee
March 18, 2020 - In this installment of Fiscal Perspectives, Legislative Analyst Gabriel Petek offers some initial observations on the recent volatility in financial markets, palpably sharp reduction in economic activity, and the state’s fiscal position at the outset of the COVID-19 outbreak.
March 10, 2020 - Over the next decade, the state will be required to allocate an additional $12 billion to $21 billion to accelerate the pay down of state retirement liabilities under the provisions of Proposition 2 (2014). This represents a key and unique opportunity for the state. The Governor offers one strategy to prioritize these funds over the next few years. Notably, the Governor focuses on the state’s share of the unfunded liability for teachers’ pensions. While we agree this focus makes sense, the amounts the Governor proposes dedicating to this purpose are not connected to the specific actuarial needs of the teachers’ pension system. In this report, we present a method the Legislature could use to tie these payments to the system’s actual needs, which would better target the funding.
February 12, 2020 - In this installment of Fiscal Perspectives, Legislative Analyst Gabriel Petek discusses why, even with high budget reserve balances, it is prudent for the Legislature to continue assessing and strengthening the state’s fiscal capacity. The post also discusses how maintaining an operating surplus in the state’s multiyear budget plan can supplement reserves as an instrument of fiscal resilience. Petek makes the case that there is a particularly strong argument for doing so in the context of a mature economic expansion.
February 10, 2020 - California has made significant progress in recent years to make its budget more resilient. Yet the process of achieving resilience can never be considered finished. This report lays out a framework for evaluating the budget’s structure using two key tools: reserves and operating surpluses. Using this framework, we evaluate the Governor’s proposed 2020-21 budget structure. We find that building more reserves or preserving a larger operating surplus would be prudent.
January 23, 2020 - Presented to the Senate Budget and Fiscal Review Committee
January 22, 2020 - Presented to the Assembly Budget Committee
January 13, 2020 - This report presents our office’s initial assessment of the Governor’s budget. We estimate the Governor had a $6 billion surplus to allocate to discretionary purposes in 2020-21. The Governor allocates most of the surplus toward one-time purposes, including maintaining a positive year-end balance in the state’s discretionary reserve. Under the administration’s estimates, total reserves would reach $20.5 billion at the end of 2020-21—this represents a $1.7 billion increase from the 2019-20 enacted level. California continues to enjoy a healthy fiscal situation. Despite its positive near-term picture, the budget’s multiyear outlook is subject to considerable uncertainty. In addition to describing the condition of the budget under the Governor’s proposal, this report discusses tools the Legislature can use to mitigate against these heightened risks.
January 20, 2020: Upon further review, one item included in the original version of Appendix Figure 3 on discretionary on health spending should not have been included (specfically, use of the Medi-Cal drug rebate fund to offset General Fund costs). Removing this item—which reduces General Fund spending—from the list of discretionary choices made in the Governor’s budget increases our calculation of the surplus to $6 billion. The document is updated to reflect these changes.
Update 1/24/20: Adjusted Judicial Branch items in Appendix Figure 1 to reflect ongoing spending.
December 9, 2019 - Under the baseline scenario in our recently released report The 2020-21 Budget: California's Fiscal Outlook, we estimate California's General Fund is on track for a $7 billion surplus in 2020-21, with around $3 billion available for new, ongoing commitments. Additionally, we estimate the state's rainy day fund will grow to $18.3 by the end of 2020-21. Despite these large estimated surpluses and reserves, our central recommendation to the Legislature is to limit its new, ongoing spending commitments to approximately $1 billion or less in the 2020-21 budget. In this new installment of Fiscal Perspectives, Legislative Analyst Gabriel Petek provides additional context for understanding the importance of limiting new, ongoing spending in the coming budget, with a short discussion of the state's fiscal structure, the state's economic backdrop, and other potential risks and uncertainties.
November 20, 2019 - The 2020-21 Budget: Fiscal Outlook Overview.
In addition to this handout, you can find the main California's Fiscal Outlook report along with a collection of other fiscal outlook material on our fiscal outlook budget page.
November 20, 2019 - The annual Fiscal Outlook publication gives our office’s independent assessment of the California state budget condition for the upcoming fiscal year and over the longer term. We find the budget continues to be in good condition with an estimated $7 billion surplus in 2020-21. However, we recommend the Legislature be cautious in allocating this surplus. Specifically, we suggest the Legislature initially plan to dedicate: (1) no more than $1 billion to ongoing purposes; (2) a significant portion toward building reserves and paying down debt; and (3) focus the remaining surplus on one-time, flexible commitments that can be changed midyear if needed.
October 17, 2019 - This post describes the debt and liability payments made as part of the 2019-20 budget package.
October 17, 2019 - Each year, our office publishes California Spending Plan, which summarizes the annual state budget. In July, we published a preliminary version of the report. This, the final version, provides an overview of the 2019‑20 Budget Act, then highlights major features of the budget approved by the Legislature and signed by the Governor. In addition to this publication, we have released a series of issue‑specific, online posts that give more detail on the major actions in the budget package.
Correction (10/29/19): Figure 4 total.