Partying Even Harder Than 1999

Dear Legislators, As you know, in nine days you must pass a budget. Based upon the Legislature's Version of the State Budget submitted by Budget Committee chairs, as of now you are on track to make a big mistake. This is a chart of the S&P 500 Index from January 1 1991 through last Friday: CA General Fund Revenues … Continue reading Partying Even Harder Than 1999 →

CA is a STATE, not a SPAC

Dear Legislators, With your deliberations over the 2021-22 Budget, you are about to make a most consequential decision. Below is a chart of General Fund Revenues and Transfers from the beginning of the last decade. The blue columns are closed fiscal years. The green column is for the current fiscal year, which closes June 30. … Continue reading CA is a STATE, not a SPAC →

LAO Gets It Partly Right

Dear Legislators,The first sentence of LAO's Multi-Year Budget Outlook published yesterday comes with an important disclaimer: 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. With that assumption in mind, LAO counsels you to add $12 billion to reserves: To … Continue reading LAO Gets It Partly Right →

38 or 76 Angels on CA’s Pin?

Dear Legislators,The 2020 Budget Act you enacted 11 months ago forecast the S&P 500 to be at 2,060 in the first quarter of 2021. But because the S&P 500 closed the quarter at nearly twice that level and CA tax revenues are correlated with stock markets, revenues are way ahead of forecast. When it comes … Continue reading 38 or 76 Angels on CA’s Pin? →

CA’s Revenue Forecasts

24 months ago, California's Department of Finance forecast $151.8 billion of revenues in 2022-23 from the three largest sources: 12 months later, DOF revised that forecast down $30 billion: 12 months later, DOF revised it up $53 billion. The reality is that neither DOF nor anyone else has any idea what California's tax revenues will be in 2022-23 or … Continue reading CA’s Revenue Forecasts →

Our View Of The May Revision to the Governor’s 2021-22 Budget

Dear Legislators,We have reviewed the May Revision to the Governor's Proposed Budget for the 2021-22 fiscal year, which starts July 1. Our views are summarized below: Unreliable Revenue Projections.Just seven months after the May Revision a year ago, the Department of Finance revised its projections for General Fund revenues for the current (2020-21) fiscal year … Continue reading Our View Of The May Revision to the Governor’s 2021-22 Budget →

DOF’s March Finance Bulletin

Dear Legislators, As usual, DOF's latest Monthly Finance Bulletin is filled with data of relevance to your responsibilities:Jobs: California's unemployment rate fell to 8.3 percent, still much worse than the national unemployment rate, which fell to 6.0 percent. Our non-farm job levels are still 1.6 million below the pre-pandemic level of 17.6 million and Personal … Continue reading DOF’s March Finance Bulletin →

Budget Amnesia In Sacramento

We have a lot of friends in the CA State Senate but we take issue with their recent assessment that “a decade of responsible budgeting enabled California to endure the recession.” That isn't factual. Here's how the 2020–21 Budget they enacted last June closed a forecasted pandemic-related deficit: Only 16 percent of the solution came … Continue reading Budget Amnesia In Sacramento →

Underfunded Kids, Overinsured Retirees

The Governor's Budget projects deficits down the road but that's no reason not to enact worthy programs with savings from eliminating unworthy programs, and especially those contributing to the structural deficit to which Governor Newsom refers in his budget message. For example, Senator Skinner has introduced a spot bill to establish Universal School Meal and … Continue reading Underfunded Kids, Overinsured Retirees →

San Diego’s Budget Deficit

Dear Legislators, Nearly half of San Diego's $86 million budget deficit appears to be attributable to a failure to access federal and state dollars. According to San Diego's latest Annual Report, in 2019 the city made $39 million in insurance benefit payments on behalf of retired employees who aren't making use of federal and state … Continue reading San Diego’s Budget Deficit →