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California Budget in Good Shape, State Analyst Reports

If we follow Jerry Brown's fiscal restraints and hedge against revenue volatility, program and service levels should stay the same as for 2012-2013, Mac Taylor says.

Jerry Brown's proposed budget shows enough spending restraint and debt payments to put the state in good shape, according to the Legislature's non-partisan State Analyst.

The Democratic governor's proposal, released last week, should keep program and service levels of 2012-2013 in place through 2014-2015, according to the Analyst's Office. One of the ways it does this is by including additional payments to get budgetary obligations "off the books," which is important because we still face a lot of risk, Mac Taylor told reporters at a news conference on Monday.

School deferrals are the biggest debt paydown of $2 billion, Taylor said. In addition, there are very few new policy proposals in Brown's proposed budget.

"This approach is really critical," Taylor said. "We have no control over what happens at the federal level...with the debt ceiling discussion. If that situation is not resolved we will feel that...and the governor's plan or ours would have to be dramatically changed."

Taylor commented on additional pressures on the state. He said the governor's plan "doesn't pay off all of our debt...it builds up very little reserve...it does nothing about our retirement obligations."

Yet he noted, "We're in a very different situation than we have been in for the last 10 or 12 years, where we would be sitting around talking about 20, 25, 30 billion dollar deficits...and that would be accompanied by proposed solutions that were sometimes complicated and controversial."

The Analyst reported in November that the state budget was roughly in balance, with an operating deficit for 2013-14 of under $1 billion and a surplus in 2014-15 of roughly the same amount.

To hear more of the Analyst's analysis of the governor's fiscal plan, you can watch this video of Monday's news conference.

Huffington Post ran this story in which Senate President Pro Tem Darrell Steinberg (D-Sacramento) said news of the improved state budget situation is "sweet music."

TELL US: What do you think of the governor's budget plan? Let us know in the comments below.

G Man January 16, 2013 at 04:51 PM
Hahahahahahahaha! This is hilarious.
two cents January 16, 2013 at 05:56 PM
Yeah, we're doing great guys! Let's hang on to that delusion...
DBell January 16, 2013 at 06:25 PM
Wow, does the states budget situation even pass the 'sniff-test'? Let alone rise to the level of being in 'good shap'
Wire January 16, 2013 at 07:46 PM
The U.S. Department of Labor maintains a fund called the Federal Unemployment Account, which provides money for states to ensure that they can maintain unemployment insurance when demand is highest. According to the National Conference of State Legislatures, 30 states currently borrow from this account. California alone has borrowed $8.8 billion so far. Beginning in 2011, the states will have to make $1.4 billion in interest payments on unemployment insurance loans from the federal government. To help pay back the loans, many states have increased unemployment insurance taxes. States should consider reforms that will make the unemployment insurance system more sound and solvent. For example, the Cascade Policy Institute in Oregon proposed creating an Individual Asset Account to improve the unemployment safety net and help build up personal assets for difficult times. Read below for more detailed information and solutions. Read more: http://www.statebudgetsolutions.org/issues/detail/unemployment-insurance#ixzz2IAZu9RrV

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