California schools and community colleges could receive $2 billion in new funds as the state collects more revenue than expected, according to a report from the Legislature’s budget advisor.
The report, released Wednesday by the nonpartisan Legislative Analyst’s Office, said income taxes and corporate levies are generating the higher revenue, offsetting lax sales tax receipts.
General fund revenue for the current fiscal year was estimated at $105.48 billion in the budget that was signed by Gov. Jerry Brown. The new report pegs it at $107.44 billion.
California’s education funding formula, which is part of the state Constitution, sends spikes in revenue to schools and community colleges.
The report highlights how California’s finances are continuing to improve after many years of budget crises. By July 2016, the state could have $4.2 billion in reserves, thanks in part to a ballot measure approved by voters earlier this month.
That measure, Proposition 2, requires state leaders to set aside money annually in a rainy-day fund beginning next year to help cushion the state against an economic downturn.
The report said the United States is in its sixth consecutive year of an economic expansion, longer than average since World War II. Although California has benefited from that, it’s unlikely to last.
“Based on the historical length of economic expansions, it is likely that a significant economic slowdown or recession will occur prior to 2020,” the report said.
California has had an infusion of revenue from Proposition 30, Brown’s temporary tax-hike measure passed by voters in 2012. The measure is scheduled to expire in 2018, and some Democratic lawmakers have discussed extending it.
However, the report from the Legislative Analyst’s Office said the state should be able to handle the loss of revenue as long as the economy is expanding then.