CHA News Article

LAO Releases State Fiscal Forecast

The nonpartisan Legislative Analyst’s Office (LAO) has released its fiscal outlook for the state. This year, for the first time in many years, the LAO has good news about California’s budget, stating that the “state’s economic recovery, prior budget cuts, and the additional, temporary taxes provided by Proposition 30 have combined to bring California to a promising moment: the possible end of a decade of acute state budget challenges.” The forecast indicates California still faces a $1.9 billion deficit over the next 19 months, but it will be considerably smaller than deficits the state has faced in recent years. The deficit projection is based on the current budget. Due to lower revenues in 2011-12 and 2012-13 as well as higher expenditures, the state will end the 2013-14 fiscal year with a deficit. The new Legislature and the Governor will need to address the $1.9 billion budget shortfall in the upcoming budget cycle in order to pass a balanced budget by June 2013. The LAO also projects that beyond 2013-14, the state will experience an operating surplus, based on steady growth in the economy. However, the LAO cautions the surplus depends on the Legislature and the Governor keeping a tight rein on state spending in the next couple of years. For the full report, visit the LAO website at