California needs fiscal restraint – even in good times
If all goes well, California can look forward to a General Fund budget surplus of $7.5 billion by the end of fiscal year 2018-19, according to the non-partisan Legislative Analyst’s Office.
In its Nov. 15 fiscal outlook, the LAO projected that under current estimates of revenue growth and absent any additional budget commitments, the state can expect to end 2018-19 with $11.8 billion in rainy-day fund reserves and $7.5 billion in discretionary reserves that the Legislature could spend if it chose to.
Beyond that point, the LAO also forecast longer-term budget scenarios through 2021-22. Under a view of continued economic growth, California could see persistent General Fund budget surpluses of as much as $6 billion a year. This is the best-case scenario for Sacramento politicians and special-interest groups, who of course would like nothing more than more money to put into new and bigger programs.
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But as noted, the scenario of surpluses in 2018-19 through 2021-22 relies on two key components: persistent revenue growth and no additional budget commitments. The likelihood of either is questionable even in the near term.
We know job growth is already slowing in the state and will continue to do so for years to come. The plausibility of an economic downturn or stock […]