State Budget Condition Publications

Despite Fiscal Forecasting Uncertainties, Multiyear Budget Planning Essential

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May 27, 2021 - Our office recently released its multiyear budget outlook based on our evaluation of the Governor’s May Revision budget proposal. An important element of this annual exercise is our independent estimate of the total cost of the Governor’s May Revision budget proposals for several years into the future. A key finding from our analysis this year is that the Governor’s ongoing spending proposals are probably too high relative to his administration’s revenue projections. This manifests in operating deficits that persist through the outlook horizon (2024‑25). Adopting a budget with this combination of assumptions is inadvisable in our view. One reason is that—given the state’s balanced-budget requirement—doing so requires assuming that the multiyear budget projections are wrong. To appreciate why this is problematic, it is useful to revisit some of the reasons for doing multiyear fiscal forecasting in the first place.

The 2021-22 Budget: Multiyear Budget Outlook

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May 23, 2021 - This report presents our office’s independent assessment of the condition of the state General Fund budget through 2024-25 assuming the economy continues to grow. While the state faces a historic surplus, a spending level beyond what is proposed by the Governor would require the Legislature to identify proposals to reject. Moreover, our analysis finds that the level of ongoing spending proposed by the Governor is only supportable with a revenue forecast that is more optimistic than the administration’s current estimates.

The 2021-22 May Revision: LAO Analyses

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May 17, 2021 - As our office publishes responses to the Governor's 2021-22 May Revision, we will add them to this index page.

The 2021-22 Budget: Initial Comments on the Governor’s May Revision

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May 17, 2021 - On May 14, 2021, Governor Newsom presented a revised state budget proposal to the Legislature. (This annual proposed revised budget is called the “May Revision.”) In this post, we provide a summary of the Governor’s revised budget, focusing on the overall condition and structure of the state General Fund—the budget’s main operating account. In the coming days, we will analyze the plan in more detail and provide additional comments in hearing testimony and online.

A Framework for Allocating Federal Recovery Funds

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May 4, 2021 - In the coming months, the Legislature will face important decisions over how to use California’s share of the state fiscal recovery funds included in the American Rescue Plan (ARP). Estimated at approximately $26 billion, the recovery funds should go a long way toward covering the state’s direct and indirect costs arising from the coronavirus disease 2019 (COVID-19) pandemic. Moreover, beyond a relatively broad set of pandemic-related parameters, the ARP likely provides states with considerable flexibility over how to allocate the funds, presenting the Legislature with a unique opportunity. In this post, we lay out some guiding principles for the Legislature to consider as it formulates a plan for using the fiscal recovery funds.

The 2021-22 Budget: The Governor’s Proposition 2 Proposals

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April 26, 2021 - This post provides an overview of the Governor’s proposals related to Proposition 2 (2014). We provide background on how the measure works, and then summarize and comment on the Governor’s Proposition 2 reserve and debt payment proposals.

The State Appropriations Limit

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April 21, 2021 - This report: (1) describes how appropriations limits work for the state, school districts, and local governments in California; (2) explains why the limit is a constraint for state government; and (3) concludes with a variety of short- and long-term policy options—both of which we think the Legislature will need to take—in response to the issue.

Flexible Funding to California in the American Rescue Plan

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March 23, 2021 - This post is our initial overview of the federal fiscal relief funding California is expected to receive from the American Rescue Plan.

Overview of American Rescue Plan: Implications for California

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March 18, 2021 - Presented to: Assembly Subcommittee No. 6 on Budget Process, Oversight and Program Evaluation Hon. Philip Y. Ting, Chair

The 2021-22 Budget: The Governor’s Suspension Proposal

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January 29, 2021 - Under current law, about $1.3 billion in state expenditures—including many that directly support core government services—are subject to potential suspension in 2021-22. Given that the state has a significant windfall, it is unlikely that these suspensions would be operative under current law. The Governor proposes maintaining the suspension calculation for 2022-23. We recommend the Legislature reject the proposed suspension language. Given that the state likely faces multiyear deficits, the Legislature might want to evaluate some the suspension items to ensure the programs are meeting their policy objectives.

Overview of the 2021-22 Governor’s Budget

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January 14, 2021 - Presented to: Senate Budget and Fiscal Review Committee

Handout: Overview of the Governor’s 2021-22 Budget

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January 11, 2021 - Assembly Committee on Budget

The 2021-22 Budget: Overview of the Governor's Budget

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January 10, 2021 - This report provides a brief summary and initial assessment of the proposed 2021-22 Governor’s Budget.

Correction 1/11/21: Totals for immediate and early action proposals have been corrected.

The 2021-22 Budget

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January 1, 2021 - An index of publications on the 2021-22 budget.

The 2021-22 Budget: CalWORKs Fiscal Outlook

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December 8, 2020 - In this post, we describe our most recent forecast for California Work Opportunity and Responsibility to Kids (CalWORKs) program costs and discuss recent caseload trends. With this post we intend to provide information but do not include any explicit recommendations to the Legislature. This post is part of our 2021-2022 Fiscal Outlook series of publications.