Latest News and Comment from Education

Monday, February 13, 2017

LAO hits Brown’s downbeat revenue projections again :: SI&A Cabinet Report :: The Essential Resource for Superintendents and the Cabinet

LAO hits Brown’s downbeat revenue projections again :: SI&A Cabinet Report :: The Essential Resource for Superintendents and the Cabinet:
LAO hits Brown’s downbeat revenue projections again



(Calif.) The non-partisan Legislative Analyst has once again expressed skepticism about Gov. Jerry Brown’s extremely conservative revenue forecasts.
In a detailed review of the administration’s K-12 budget plan, the LAO noted that economic conditions do not appear to support Brown’s assumption that fewer tax dollars will be collected this spring than estimates made last summer. As a result, the LAO said the Legislature should exhaust other options before agreeing to Brown’s plan to hold back a $859 million payment to schools from June to July.
The LAO is also concerned about an idea broached by the administration to send special education money directly to local educational agencies instead of the existing system where regional panels manage the funding.
Finally, the LAO is not supportive of the governor’s proposals to change preschool and transitional kindergarten, nor his ideas about the use of school construction bond money.
With the June 15 deadline for adopting a new budget looming on the horizon, the theme of the negotiations for the 2017-18 spending plan has been well established–that is, whether anyone in the Legislature will buy into Brown’s pessimistic take on the economy.
Based on the fact that all three of the state’s largest tax sources failed to meet estimates made last July, Brown’s January budget proposed providing about $733 million less in Proposition 98 funding than had been anticipated.
But there is some evidence that the drop in tax collections–especially for the unpredictable and volatile personal income tax–was only a delay.
That is, some savvy Wall Street investors living in California appear convinced that a tax reform package will eventually emerge from Congress in 2017 and thus, held off paying capital gains in December rather than sometime later this year when the rates might be lower.
Given the direction of the stock market since the November presidential election, the LAO, along with many observers, believe that when the governor gets ready to release his revised budget in May, the estimates made last July for how much the state will have to spend are likely to be a lot closer than the ones Brown forecast in January.
“As discussed in our recent Overview of the Governor’s Budget report, we believe the administration’s estimate of state revenue is low given its other economic assumptions,” the LAO said. “By May, General Fund revenue in 2017-18 could be significantly higher than assumed in January.”
Perhaps in response to the LAO’s optimism, Assembly Speaker Anthony Redon, D-Paramount, has already put into motion groundwork aimed at spending some of that additional money to improve services to early learners.
One of the governor’s other major education policy proposals contained in his budget calls for LAO hits Brown’s downbeat revenue projections again :: SI&A Cabinet Report :: The Essential Resource for Superintendents and the Cabinet: