The Legislative Analyst’s Office is projecting that the surplus in the state’s General Fund, assuming there is not a recession in coming years and spending remains relatively flat, will rise from $5.4 billion next year to nearly $10 billion in 2017-18 and then remain level. Source: LAO
From gloom to boom, how quickly thing change. A resurgent economy and recalculations of revenue from the past two years will leave the state budget with a multi-billion dollar surplus next year and K-12 schools and community colleges with unexpected billions more to spend, according to a projection that the Legislative Analyst’s Office released on Tuesday.
“The state’s budgetary condition is stronger than at any time in the past decade,” the LAO concluded in its 2014-15 Fiscal Outlook. “The state’s structural deficit – in which ongoing spending commitments were greater than projected revenues – is no more.”
The LAO’s annual projection is the prologue to the numbers that really count – Gov. Jerry Brown’s 2014-15 budget – which will be released in early January. Nonetheless, it will whet legislators’ appetites to what could be a big food fight over restoring cuts from the recession and creating new programs.
Michael Cohen, Gov. Jerry Brown’s director of finance, immediately sought to temper expectations in a statement to the Sacramento Bee. “The focus must continue to be on paying down the state’s accumulated budgetary debt and maintaining a prudent reserve to ensure that we do not return to the days of $26 billion deficits,” it said.
Brown’s current budget projects a $1.1 billion surplus for the year ending June 30. The LAO predicts that surplus will rise to $5.6 billion at the end of 2014-15, even after factoring in higher spending for K-12 and community colleges demanded by Proposition 98, the voter approved