Legislative Analyst

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Initiative Analysis: Spousal support. lao.ca.gov/laoapp/ballot_…
Our office just released its analysis of the tentative agreement between the state and Bargaining Unit 13 (Stationary Engineers) pursuant to Section 19829.5 of the Government Code. lao.ca.gov/Publications/R…
The state has a $52 billion surplus—now is the time to prepare for these looming budget problems. (8/8)
We discuss some ways the #CALeg can hedge against these risks, such as adopting lower revenue estimates, planning for future SAL requirements, and building more reserves than constitutionally required. (7/8)
The #CAbudget faces dual risks: on the downside, the risk of a recession and, on the upside, the risk that the state’s constitutional requirements—paired with its current budget commitments—will exceed its available resources. (6/8)
At the same time, economic indicators currently suggest a heightened risk of recession within two years. (5/8)
Consequently, under the Governor's May Revision policies, the state would have very significant budget shortfalls in the out-years. (4/8)
However, SAL requirements also would reach $10 billion to $20 billion per year over the multiyear period (right-hand side of the figure). (3/8)
We find that the May Revision is barely balanced before accounting for state appropriations limit (SAL) requirements (see the left-hand side of the figure). (2/8)
Our office has just released the Multiyear Budget Outlook, our independent assessment of the condition of the #CABudget under the Governor's May Revision policy proposals. (1/8) lao.ca.gov/Publications/R…
California’s state government cannot expand on an ongoing basis without risking significant budget problems. We recommend the #CALeg take a fiscally prudent approach: identify several billion dollars in non-excluded spending and instead dedicate those the funds to reserves. [7/7]
The May Revision proposes a number of new initiatives. While they may be meritorious, we recommend the Legislature consider whether there are (1) existing programs addressing problems that are a higher priority or (2) other issues that should be addressed more immediately. [6/7]
Under the rules of the SAL, the Legislature could appropriate funds this year to a specific excluded purpose and disperse those funds over multiple years. We recommend the #CALeg evaluate whether disbursing funding over multiple years would be preferable. [5/7]
The majority of the Governor’s excluded spending proposals are for (1) tax refunds and (2) transportation, natural resources, and energy-related capital outlay. We recommend the Legislature consider whether the specific approaches proposed are effective. [4/7]
The SAL requires the #CALeg to allocate revenues above a certain threshold to purposes like capital outlay, tax refunds, and/or school payments. We recommend the Legislature consider how its policy goals could align with each of these categories. [3/7]
The Governor's May Revise leaves $3.5 billion in unaddressed requirements in 2022-23, but we recommend the Legislature address all state appropriations limit (SAL) requirements. [2/7]
Today's report on the #CABudget May Revision also includes some guidance to the #CALeg on allocating the surplus with a focus on legislative flexibility, effectiveness, and sustainability. This thread lists these suggestions. [1/7] lao.ca.gov/Publications/R…
Such efforts could help the state return its reserves back to pre-pandemic shares of the #CAbudget. [6/6]
To address the SAL or a recession, we recommend the Legislature consider building more reserves than the Governor proposes. A fiscally prudent approach would be to identify several billion dollars in non-excluded spending and instead dedicate those the funds to reserves. [5/6]
As our report discusses, economic indicators currently suggest a heightened risk of a recession within two years. [4/6]
The Governor does not have a plan to address this roughly $25 billion requirement. As a result, under the May Revision plan, the state would very likely face a significant budget problem next year. [3/6]
The Governor leaves $3 billion in unaddressed state appropriations limit (SAL) requirements in 2022-23. Also, we estimate the state would face an additional SAL requirement of over $20 billion in 2023-24. [2/6]
Today's report on the #CABudget May Revision includes some overall comments and recommendations for the #CALeg. [1/6] lao.ca.gov/Publications/R…
Within the overall General Fund surplus, the Governor uses $34 billion to meet requirements under the state appropriations limit (SAL). [4/4]
The Governor's spending proposals total $34 billion using the overall General Fund surplus and $33.5 billion using the surplus within the school and community college budget. [3/4]
We estimate the Governor had an overall surplus of $52 billion to allocate in the May Revision. [2/4]
We have just released our analysis of the Governor's #CABudget May Revision. [1/4] lao.ca.gov/Publications/R…
In our new post, we identify key questions for the Legislature to consider when analyzing the merits of the relief options proposed by the Governor and designing its own relief package. [2/2]
Prices for many types of goods across the state have increased notably over the past year—particularly fuel prices. In response, both the Governor and members of the Legislature have expressed interest in providing fiscal relief to Californians. [1/2] lao.ca.gov/Publications/R…
The state’s school-age population will likely continue to decline, as birth rates are projected to remain relatively low. Over the long term, this will likely result in continued declines in K-12 student enrollment. [7/7]
The preliminary 2021-22 data includes attendance data through December, prior to the significant surge in COVID-19 cases from the Omicron variant. The state will have another update on student attendance in June 2022. [6/7]
Enrollment declines are not explained by a shift to private schools. Private school enrollment increased by 13,200 from 2019-20 to 2021-22 (2.4 percent), which is relatively small compared with the enrollment decline in public schools (254,300 students). [5/7]
About half of the attendance decline was in grades K-3, with a decline of 224,000 students (12.5 percent). Given enrollment declines are particularly large in the early grades, they could be primarily driven by the pandemic. [4/7]
One important factor affecting attendance is the decrease in enrollment during the pandemic. Statewide enrollment in 2021-22 declined 4.2 percent (about 254,000 students) since 2019-20—roughly half of the rate of decline for attendance. [3/7]
From 2019-20 to 2021-22, school district attendance declined by 468,600 students (9 percent), while charter school attendance declined by 8,800 students (1.4 percent). Statewide attendance is down 477,400 students (8.2 percent). [2/7]
Our new post describes our findings from the preliminary student attendance and enrollment data for 2021-22 from the California Department of Education. [1/7] lao.ca.gov/Publications/R…
Faced with both upside and downside budget risk, we recommend the Legislature apply close scrutiny to any new spending proposals and consider using this moment of strong tax collections to enhance its fiscal resilience. [5/5]
Strong revenues exacerbating upside risk, followed by a recession (downside risk), is plausible. Unless CA’s SAL requirements are addressed with current resources, this sequence of events could turn into a worst-case scenario. [4/5] lao.ca.gov/LAOEconTax/Art…
A new Fiscal Perspective describes how, simultaneously, inflationary pressures and the Fed’s response have increased the risk of recession according to economic forecasters and financial market indicators. This presents downside risk to CA’s budget. [3/5] lao.ca.gov/Publications/R…
Having essentially reached the Prop 4 (1979) State Appropriations Limit, cont’d revenue growth could increase CA’s constitutional funding obligations enough to cause large recurring deficits. Counterintuitively, each $1.00 above the limit worsens the state’s budget outlook. [2/5]
Our office recently released an analysis of how California faces a challenging fiscal outlook despite its persistently strong tax collections. In the vast majority of revenue scenarios we evaluated, the state encounters deficits by 2025-26. [1/5] lao.ca.gov/Publications/R…
The administration proposes sorting the first-round applications into three groups. [3/3]
The state received more applications for the first round of grants than total available program funding. [2/3]
We have just released an analysis of the Governor’s proposed awards for the Higher Education Student Housing Grant Program. [1/3] lao.ca.gov/Publications/R…
Our new report, Climate Change Impacts Across California: Health (part of a recent series), raises questions for legislative consideration about how health policies, programs, and delivery systems can minimize these adverse health impacts. [4/4] lao.ca.gov/Publications/R…
Climate change could challenge the state’s health care delivery system by placing additional strain on emergency response systems, increasing demand for climate related services, and increasing the need for information sharing and workforce. [3/4]
These effects are not borne equally across California. Some regions are more susceptible or less able to adapt and certain people are more vulnerable due to underlying health status, age, means, type of work, or other characteristics. [2/4]
Climate change will have increasingly adverse health effects—such as heat-related illness and death—on Californians. [1/4]
While climate change can and will negatively impact housing in some locations, curbing housing development overall is untenable given the state’s housing shortage. [5/5]
To respond to these impacts, the Legislature likely will need to take a comprehensive approach that addresses the problem from multiple angles. [4/5]
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