Updated 10:38 pm, Wednesday, November 20, 2013
Sacramento –For the first time in nearly a decade, California is collecting more revenue than it is spending and will finish the fiscal year with an extra $2.4 billion, according to a report released Wednesday by the Legislature’s nonpartisan budget analyst.
The good news comes after an era that saw one of the worst budget crises in California history – the fiscal shortfall sank to $60 billion in the 2009-10 budget, the state controller mailed IOUs to vendors in 2009 and state lawmakers slashed programs year after year to make ends meet.
Now, thanks to the passage of Proposition 30 last year and the improving economy, California is looking at surpluses for the next six years – even after the temporary taxes under Prop. 30 expire, according to the Legislative Analyst’s Office.
The legislative analyst projected surpluses of $2.4 billion by June 2014 and $5.6 billion by June 2015. Reserves are projected to continue growing to nearly $10 billion by June 2018.
The state will spend $96.2 billion for general fund services this year, which include public education, colleges and universities, prisons, and health and human services.
Legislative Analyst Mac Taylor said Prop. 30, which increased sales taxes through 2016 and personal income taxes on the wealthy through 2018, would not have the “fiscal cliff” effect that some feared.
$3.1 billion for schools
Under the analyst’s projections, California schools will receive an additional $3.1 billion this school year.
“Despite the good news of the report … we do caution the Legislature that things can change quickly,” Taylor said.
The report noted that a relatively moderate economic downturn could result once again in operating deficits, even if the Legislature did not spend reserves from 2013-14 and 2014-15.
“We aren’t predicting that kind of downturn in the very near future, but it is possible,” Taylor said. “The last thing we would want the Legislature to do is be in the same shape it was in 2008 when we went into the great recession, when we had no reserves and an underlying budgetary problem.”
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