Industry: Government
News
May 19, 2017

Since Fiscal Year 1984-1985, real special fund expenditures have ballooned a whopping 447 percent or about 6 percent, on average, per year.  In Governor Brown’s budgeting era, more and more of the budget is locked into these special funds. The May Revise pegs total special fund expenditures at $56 billion for Fiscal Year 2017-2018, about 50 percent higher than Arnold Schwarzenegger’s last budget and more than double Gray Davis’ last budget.  Moreover, we’ve seen a rise in the share of special fund spending to overall expenditures. The May Revise has special fund spending accounting for almost one-third of overall expenditures. This is not an anomaly for Governor Brown.  On average, real special fund expenditures have been 28 percent of overall spending during his last two terms – the highest of recent Governors. 

News
May 19, 2017

The big risk the Governor will have to face is the possibility that the investment markets may tank after making the contribution prepayment. Remember, if you lose 50 percent on your investments this year, you have to earn 100 percent next year just to break even on your principal. Will Rogers put it best, “I am not so much concerned with the return on capital as I am with the return of capital.”

It’s not a good idea to time the market. It’s better to dollar-cost average, which means investing the same amount at regular intervals over time.

Report

The latest new vehicle sales data from California New Car Dealers Association shows continued but slowing growth in Californians purchases of new cars and trucks.

News
April 28, 2017

Two new reports by the Pew Charitable Trusts suggest that state governments across the country are shortchanging their employee pension funds and aren’t adding enough money in emergency funding accounts to prepare for the next economic crisis or recession.

Mishandling hundreds of billions of dollars of pension funds and draining emergency spending accounts could pose serious problems for governors and state legislators when the next big economic crisis hits.

Report

Even states that have overcome the effects of the recession may face financial pressures that could shape their budgets now and for years to come. A major issue for a number of states is how to cope with an accumulation of unfunded public pension and retiree health care liabilities, which total more than $1.5 trillion nationwide. In addition, debate among U.S. lawmakers over financing for Medicaid, which is jointly funded by federal and state governments, has sparked fresh uncertainty over how much of the costs states will pay. The health care program accounts for the largest share of total federal aid to states. Another challenge for states is tax revenue volatility, which can confound policymakers’ best efforts to balance budgets.

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