Budget Problem for State in 2015-16?
Legislative Analyst's Office Issues Report Outlining Scenarios
Under four of five hypothetical scenarios, the Legislature would need to make modest cuts or increase revenue to balance next year’s budget, according to the non-partisan Legislative Analyst’s Office.
This unexpected problem results from higher-than-expected revenues in the current year and the coming budget year. Those increased revenues give K-14 schools a higher guarantee under Proposition 98 in both the current year and the coming year, leaving less funding available for other programs, debt payments, and reserves.
The increased revenue could also increase the one-time payment to counties and other local agencies for pre-2004 mandate debt, as promised in the current year budget. The LAO estimates that this payment, estimated at $533 million in the Governor’s January Budget, could rise by $159 million or 170 million if revenues surge. That would leave only about $100 million to be paid off.
The budget reserve would also require more money under the provisions of last year’s Proposition 2 under the scenarios the LAO presents.
The LAO report stresses that their scenarios are only projections. Many other scenarios are likely and the size of any problems are minor compared to the budget deficits faced just a few years ago, but the LAO still urges lawmakers to begin planning for the possible need for budget solutions.
Of course, the upside of these “budget problems” is that schools and community colleges would see increased funding. The surging revenue could be used to pay for new and upgraded school facilities, pay off school mandates, or make progress in meeting the Local Control Funding Formula targets.
The Governor’s May Revision will include updated revenue estimates. Until then, counties can keep up with personal income tax revenues with the State Controller’s Personal Income Tax Daily Revenue Tracker, also announced Tuesday.