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January 31, 2018 - The Governor proposes $450,000 in General Fund in 2018-19 and $400,000 annually thereafter to fund costs associated with providing IT support to State Treasurer's Office (STO) and the various boards, commissions, and authorities (BCA). We recommend that the Legislature approve the amount of the requested budget augmentation, but fund it from the various funds that support the STO and the BCAs rather than solely from the General Fund.
January 8, 2018 - The State Archives preserves and stores state government records of historical significance. Its collection of both physical and digital records grows annually. Under current practices, the State Archives will exhaust its capacity to store physical records within the next 15 years. To address these capacity concerns, we present two alternatives for legislative consideration. First, the Legislature could increase the Archives’ physical capacity while keeping archival practices similar to the status quo. This alternative would require the state to begin a planning process within the next few years. Second, the Legislature could direct the State Archives to rely principally on digital records in the future. This alternative could limit or delay the need for a new building, but would involve changes in state processes and new information technology systems.
December 7, 2017 - In this report, we provide background regarding the objectives and operations of the Project Management Office (PMO), detail our findings in evaluating the PMO, introduce two significant recent developments and their impacts on the PMO, and make associated recommendations on how the Legislature should proceed to better align the office with the original legislative intent.
November 15, 2017 - This post discusses the fiscal effects of California's minimum wage on the General Fund.
October 9, 2017 - When a property changes hands the taxes paid for the property often increase substantially. This is not true for most inherited property. Three decades ago, the Legislature and voters decided inherited property should not be reassessed when transferred. This has been a consequential decision. Many have benefited from the tax savings this policy affords. Nonetheless, the inheritance exclusion raises some policy concerns. Because of this, the Legislature may want to revisit the inheritance exclusion. Depending on the Legislature’s goals, the existing policy may be crafted too broadly and options are available to better target its benefits.
A short video accompanies this report.
July 6, 2017 - Los Angeles' prospects for hosting an Olympic and Paralympic Games are strong, according to widespread reports. The California Legislature has provided a $250 million backup guarantee for shortfalls of the 2024 Games, but Los Angeles' bid for 2024 is fairly low risk and it is hoped that no state guarantee funds will ever have to be paid out. As the possible due date for the Governor's execution of a guarantee contract with Games organizers approaches, our office continues to recommend a strong legislative oversight role to help Games organizers deliver a low-cost and successful event. This update focuses on (1) yesterday's report from a key Olympic commission evaluating the 2024 bids of Los Angeles and Paris and (2) the widely reported possibility that Los Angeles or Paris will be offered the chance to host the Games in 2028 instead of 2024.
June 8, 2017 - Presented to: Budget Conference Committee
June 7, 2017 - Presented to: Assembly Budget Subcommittee No. 6 On Budget Process, Oversight, and Program Evaluation
June 2, 2017 - Presented to: Budget Conference Committee
May 16, 2017 -
As part of his May Revision, the Governor proposes the state borrow $6 billion from the Pooled Money Investment Account (PMIA) to make a one-time payment to reduce state pension liabilities at CalPERS. The Governor proposes that the state and General Fund and special funds repay this loan with interest over a period of about eight years.
As we discuss in this brief, we think the plan would probably save the state money over the long run, although uncertainties remain about the likelihood and magnitude of this benefit. However, the administration is asking the Legislature to approve a large commitment of public resources with insufficient consideration. The administration has provided few of the legal or quantitative analyses that the Legislature should expect when receiving a request of this magnitude and complexity. Moreover, the administration has introduced this proposal as part of the May Revision—with only weeks before the constitutional deadline for the Legislature to approve the budget. We doubt all of the issues we raise in the brief can be reviewed by the June 15 deadline. However, there is no reason that the Legislature must make a decision before June 15. We recommend the Legislature wait to act on this plan until after the administration has submitted more analysis. At that point, the Legislature could decide whether or not to approve the proposal.
May 16, 2017 -
In this analysis, we discuss the Governor’s cannabis-related May Revision proposals for seven state departments. Based on our initial review of these proposals, we provide (1) overarching comments and (2) recommendations on each department’s specific proposal.
LAO Bottom Line. The Governor’s May Revision proposes 201 positions and $43.2 million in 2017‑18 from various funds to conduct cannabis regulation-related activities. These resources are provided across seven state departments. Based on our initial review, we recommend making key policy choices regarding how the cannabis industry will be regulated before finalizing budget decisions, as well as limiting the amount of out-year funding provided to departments given the high level of uncertainty regarding future workloads. Accordingly, we also provide recommendations on each department’s specific proposal.
May 5, 2017 - The CalSTRS board recently acted to change assumptions used to estimate its unfunded liabilities, including the key assumption about future investment returns--sometimes referred to as the "discount rate." These and other recent developments have eroded CalSTRS' funding situation. This brief details these changes and describes how they will affect the state, school and community college districts, and teachers
May 4, 2017 - Presented to the following Senate Budget and Fiscal Review Subcommittees: Resources, Environmental Protection, Energy, and Transportation Health and Human Services State Administration and General Government
April 25, 2017 - In a Spring Finance Letter, the Governor proposes using remaining funds from a 2009 settlement agreement to provide the Secretary of State a three-year funding increase of $463,000 per year and three positions to support the agency’s activities related to the implementation of SB 450. We recommend that the Legislature (1) use this proposal and the implementation of SB 450 to reconsider the state’s role in paying for elections administration and (2) consider the appropriate level, duration, and source of funding to support the Secretary of State’s SB 450 activities.
April 24, 2017 - Presented to: Assembly Budget Subcommittee No. 4 on State Administration