LAO Fiscal Forecast 2012-13

The Legislative Analyst's Office has just issued the following report:

California’s Fiscal Outlook: The 2012-13 Budget

Our updated assessment of California’s economy and revenues indicates that General Fund revenues and transfers in 2011-12 will be $3.7 billion below the level assumed in the June budget package. This revenue shortfall would translate into $2 billion of potential “trigger cuts” to various state programs—including all of the “Tier 1” trigger cuts and three-fourths of the “Tier 2” trigger cuts. (The Director of Finance will determine the actual amount of trigger cuts next month.)

We forecast that the state will end 2011-12 with a $3 billion deficit, including the effects of the trigger cuts that could result from our revenue forecast. In 2012-13, we forecast that the state will face increased costs due to the expiration of a number of temporary budget measures, a significant increase in Proposition 98 school costs under current law, the required repayment of a $2 billion Proposition 1A property tax loan used to help balance the budget in 2009, and other factors. These factors contribute to a projected $10 billion operating shortfall (the difference between annual General Fund revenues and expenditures) in 2012-13. The $3 billion “carry-in” deficit from 2011-12 and the projected $10 billion operating deficit in 2012-13 mean that the Legislature and the Governor will need to address an approximately $13 billion budget problem between now and the time that the state adopts a 2012-13 budget plan. (50 pp.)

This report available using the following link:

In addition, see three videos summarizing the report. Legislative Analyst Mac Taylor provides an overview and Deputy Jennifer Kuhn discusses Proposition 98. Deputy Jason Sisney explains the revenue and economic outlook.