Excellent Fiscal Forecast Reported by Legislative Analyst’s Office
The non-partisan LAO, which exists to provide objective analysis of public policy to the Legislature, recently released its annual report outlining California’s fiscal outlook in advance of the 2019-20 legislative and budget season. This report is intended to inform the legislature of revenue expectations in the coming year to guide their policy decisions during the budget deliberation process next Spring. The first sentence in this year’s report reads: “The budget is in remarkably good shape. It is difficult to overstate how good the budget’s condition is in today.”
The LAO projects that the state’s reserves will reach $14.5 billion by the end of the next fiscal year and that there will be an additional $14.8 billion in surplus general fund revenue available to be allocated for the 2019-20 budget process. The higher revenues are attributed to strong personal income tax growth, due to higher-than-average wage growth, and growth in the stock market.
Governor-elect Newsom will be sworn into office on January 7 and will promptly release his 2019-20 budget proposal by the January 10 budget deadline. We expect the 2019-20 budget proposal to include a plan for allocating the surplus revenue that will likely be reflective of Governor Newsom’s top policy priorities.
Read the full LAO report.