State’s Fiscal Future Is Looking Brighter, Legislative Analyst Says


California’s independent legislative analyst Elizabeth Hill on Thursday issued a qualified but generally rosy assessment of the state’s financial future, crediting rising revenues and declining welfare rolls as major factors in restoring fiscal health to state government.

Adding her own outlook to similarly recent positive assessments by private economists and the Wilson Administration, Hill told a news conference: “After five years of multibillion- dollar budget gaps, the near-term fiscal outlook is considerably more favorable” for state services and other spending requirements.

For the first time in years, the state will end the fiscal year June 30 with an adequate budget reserve of $300 million, Hill estimated. Schools stand to receive about $650 million more than the state budget now provides, according to the analyst’s calculations.

Thereafter, despite revenues rising at a brisk 6.3%, higher expenditures will take a toll, she said. Reserves will shrink and eventually, in the 1997-98 fiscal year, California will revert to its familiar deficit mode, the analyst said, although not by the billions of dollars that the state endured during the recession years.


In the meantime, the near-term improvements represent good news for the state and its working population, if Hill’s analysis holds up. She projected that all 725,000 jobs lost in California during the recession will be recouped by the end of next year--even though that’s a job growth rate of only two-thirds of what it was in the 1980s, and few laid-off $50,000-a-year aerospace workers are likely to earn as much in new jobs.

She said pay levels in such expanding industries as movies and other entertainment nevertheless translate into a 5.8% increase in Californians’ personal income over the next three years.

Construction, trade and electronics-related manufacturing are other promising sectors for additional high-end hiring--benefiting wage earners and the state through additional income taxes--but there are still stubborn soft spots in the job market, Hill said. Among them are financial services, federal government employment and, though improving, aerospace-related manufacturing.

On the health and welfare front, the days of rising caseloads in some major categories have ended, and even though benefits are set to increase as temporary reductions come to an end, the number of people receiving welfare checks and medical treatment is expected either to drop or grow more slowly in the next two to three years, Hill said.

An exception is assistance to the elderly, blind and disabled, a group that is growing in number, estimated to approach 1.1 million in the next two years, according to Hill’s analysis.