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.
November 16, 2022 - Our 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. In this report, we anticipate the state will have a $24 billion budget problem to solve in the upcoming fiscal year and operating deficits declining from $17 billion to $8 billion over the multiyear period. The goal of this report is to help the Legislature begin crafting the 2023‑24 budget. Our analysis relies on specific assumptions about the future of the state economy, its revenues, and its expenditures. Consequently, our estimates are not definitive, but rather reflect our best guidance to the Legislature based on our professional assessments as of November 2022.
Update (11/22/22): The original version of this report identified a $25 billion—instead of a $24 billion—budget problem, which reflected an error in the way we accounted for student housing grant program funding.
May 16, 2022 - On May 13, 2022, Governor Newsom presented a revised state budget proposal to the Legislature. (This annual proposed revised budget is called the “May Revision.”) In this brief, 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. The information presented in this brief is based on our best understanding of the administration's proposals as of 11:00 AM, May 14, 2022. In many areas of the budget, this understanding will continue to evolve as we receive more information. We only plan to update this brief for very significant changes (that is, those greater than $500 million).
Update (5/20/22): Updated to reflect information about state appropriations limit (SAL) excluded spending and other budget proposals.
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 13, 2023 - On January 10, 2023, Governor Newsom presented his proposed state budget to the Legislature. In this report, we provide a brief summary of the proposed budget based on our initial review. In the coming weeks, we will analyze the plan in more detail and release several additional budget analyses.
March 30, 2022 - This brief estimates the condition of the budget over the multiyear taking state appropriations limit requirements into consideration.
February 15, 2023 - This brief provides our current assessment of the scale of the coming budget problems under the Governor’s budget proposals. We also provide our guidance to the Legislature about how to address these shortfalls given current economic conditions.
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 15, 2022 - Persistent high inflation presents federal and state policymakers with an economic problem not seen in roughly four decades. In fact, during much of the past 15-year period, inflation not only was subdued, it consistently ran below the Federal Reserve’s (the Fed’s) target of 2 percent. Chronically below-target inflation eventually prompted the Fed in August 2020 to adjust its policy framework to combat this tendency. Not long after, however, in the wake of the COVID-19 pandemic, inflation trends and the Fed’s orientation to them began to reverse. Once it emerged, inflation accelerated throughout 2021 and has remained elevated this year with as yet indeterminate signs of abating.
May 17, 2019 - This report presents our office’s independent assessment of the condition of the state General Fund budget through 2022-23 assuming the economy continues to grow and all of the Governor’s May Revision spending proposals are adopted.
April 19, 2023 - Through the final months of the 2023-24 budget process, California’s Legislature will make numerous important decisions regarding the allocation of state resources in the context of a budget problem. Few choices will be as consequential for the state’s medium-term fiscal outlook as whether or not to draw upon its budget reserves to close a projected deficit.
May 17, 2018 - This post presents our office’s outlook for the condition of the state’s General Fund through 2021-22 based on the Governor’s 2018-19 May Revision proposals.
January 13, 2022 - On January 10, 2022, Governor Newsom presented his proposed state budget to the Legislature. In this report, we provide a brief summary of the proposed budget based on our initial review. In the coming weeks, we will analyze the plan in more detail and release several additional budget analyses.
Update (1/21/22): Includes a corrected estimate of Governor’s Budget proposals that are excludable under the State Appropriations Limit (SAL).
May 20, 2016 - This online post is our office’s multiyear outlook for California’s General Fund through 2019-20 based on current state law and policies, as modified by the Governor’s May Revision proposals. This is part of our response to the Governor’s 2016-17 May Revision. Our outlook estimates the state will end 2016-17 with $8.7 billion in total reserves. Over our outlook period, and assuming continued economic growth, we estimate the state’s budget has the capacity to pay for the Governor’s May Revision proposals over the period. After 2016-17, the state would have a few billion dollars available each year to build reserves or make additional commitments. Despite these budgetary surpluses, compared to other recent similar analyses, our outlook shows much smaller budget surpluses. Surpluses have declined largely as a result of new spending commitments by the state, including the increased state minimum wage. As a result, the state’s budget is now more vulnerable to a future economic downturn than it was last year. For this reason, we suggest the Legislature aim to pass a state budget with a robust level of total reserves this year.