The state’s budget watchdog agency has issued its forecast of the state’s General Fund shortfall for the next budget year, estimating the state faces a shortfall of nearly $21 billion. The Legislative Analyst’s Office says the budget gap consists of a $6.3 billion projected deficit for the rest of 2009–10 and a $14.4 billion gap between projected revenues and spending in 2010–11. The 2010-11 estimated deficit is much higher than previous predictions of around $7 billion.
While the September 2008 and February 2009 state budget agreements cut billions of dollars from state public services, they also included changes to corporate tax rules that will net millions of dollars in tax breaks for some California businesses. A report from the California Budget Project explains how the changes — elective single sales factor apportionment, tax credit sharing, and net operating loss carrybacks — will cost the state $8.7 billion in lost revenues between 2008-09 and 2015-16. The companies that will profit from the changes are some of California’s largest — 80 percent of the benefits will go to companies with gross receipts in excess of $1 billion.
Looking at trends in employment, income, consumer spending, and housing, California Forward predicts that the state’s budget crisis will be longer and more difficult than generally anticipated. Forecasting a drop of 11% over the next two years in the state’s three major revenue sources (sales and use taxes, income taxes, and corporate taxes), the authors argue that more serious, systemic reforms are necessary to prevent further fiscal turbulence.
The record setting budget stalemate of 2008 has revived the debate over requiring the budget to pass with two-thirds legislative majority. Public Policy Institute of California looks at this and other fiscal policy restrictions, finding that California ranks first among states in the number and types of constraints it places on taxing and spending.
As legislators grapple with the state’s current fiscal crisis, Adam Summers’ report looks back at the policy decisions that led to this point. Analyzing the budgets and spending patterns of previous three governors, he asserts that excessive spending (not lack of revenue) is to blame for the state’s historic budget deficit, and makes recommendations for reform.
Proposition 1A would make significant changes to the size of the state’s reserve (“rainy day”) fund, and place new restrictions on its use. The California Budget Project examines the proposition’s complex formulas, and describes its potential impact on state budgeting practice and existing state programs.
[Legislative Analyst's Office]
The Legislative Analyst’s Office has released analyses of each of the six measures on the May 19 special election ballot. Each report includes background, a detailed description of the measure, and both short- and long-term fiscal effects.
The California Budget Project has issued a series of reports analyzing the impact of the Governor’s budget on local communities. These new analyses include county-by-county breakdowns showing the impact to schools and programs, including CalWORKs, IHSS, and SSI/SSP.
Martha Jones of the California Research Bureau reports on where state funds are spent, and documents an uneven distribution across regions. Data collection problems abound. Among her findings: “there seems to be a growing disconnect concerning the amount of local assistance reported by the state in the Governor’s Budget compared with the amount of state or federal aid reported as received by local jurisdictions.”
Legislative Analyst Mac Taylor pulls no punches when it comes to California’s fiscal outlook. In a hole… getting deeper… two ways out and we need both: decrease base spending and increase revenue. The legislature faces a monumental task and must begin laying the groundwork now for a fiscally responsible 2009-10 budget.