09/24/2021

California’s state budget is so flush words can’t describe it

Gov. Jerry Brown’s parting gift to Gov. elect Gavin Newsom is a state budget so flush with unrestricted tax revenue that top fiscal analysts struggled to find the right words to describe it.

“The budget is in remarkably good shape,” reads the annual fiscal outlook by the Legislative Analyst’s Office. “It is difficult to overstate how good the budget’s condition is today.”

Economic trends are so sunny that the analyst’s office projects a state budget surplus of $14.8 billion next year, unless the Legislature chooses to spend the money or cut taxes.

The Legislature and Newsom could follow Brown’s lead and use that money to continue preparing for a recession. If so, the state would have about $30 billion in reserves to weather a recession by the summer of 2020.

Or lawmakers could use the money to seed some of the proposals that Brown repeatedly nixed in his last years in offices, such as expanding health care coverage to undocumented immigrants or putting more funds into programs aimed at helping low-income Californians.

The analyst’s report sounds one significant note of caution. It warns that California government finances can change suddenly because it is dependent on income taxes from high-earners, which can plummet in a downturn.

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