When facing budget problems in the past, the state has “deferred” payments from one fiscal year into the next, providing significant one-time budgetary savings. While the state has already addressed many of its outstanding deferrals, there are still three major categories of deferrals remaining. These are related to: (1) state employee payroll, (2) pension payments, and (3) Medi-Cal payments. The Governor proposes using $1.7 billion to undo the payroll and pension deferrals. We find this would improve the state’s fiscal position and moderately improve the state’s budgetary practices, however, this approach has shortcomings relative to alternatives. This post recommends an alternative approach to the Governor’s proposal.