Legislative analysts have praise, warnings for California budget

Gov. Jerry Brown discusses the state budget during a news conference in Sacramento on Jan. 9.
(Rich Pedroncelli / Associated Press)

The nonpartisan Legislative Analyst’s Office issued a report Tuesday saying California’s revenue could exceed Gov. Jerry Brown’s projections by billions of dollars.

The additional money would likely be directed to schools and community colleges by the state’s constitutional education-funding formula, the report said.

Legislative analysts were largely complimentary of the governor’s budget proposal, saying his priorities are “generally prudent ones.” Brown’s hesitancy to increase funding for some government programs “could help avoid a return to the boom and bust budgeting of the past,” the report said.

There was also praise for Brown’s desire to tackle $71.8 billion in long-term costs for retiree healthcare, although the report noted that his budget proposal does not include any money for that purpose.


The analysts cautioned that California’s revenue, which is highly dependent on swings in the stock market, may not continue growing at such a fast clip in coming years.

“State revenue collections now may be peaking, due largely to surging stock prices in 2014,” the report said. “History cautions that this level of peak revenue will not persist for long.”

An economic downturn could be damaging to state finances. Brown’s proposal includes $3.4 billion in total reserves, which includes $2.8 billion in the rainy-day fund approved by voters in November.

But with a budget as large as California’s, even that “provides little protection for budgetary shortfalls that can reemerge with little warning,” the report said.


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