California Money

AP Nation / World
By Jonathan J. Cooper
Associated Press
Nov 16, 2016 – 6:35 PM EST

SACRAMENTO, Calif. (AP) — California’s nonpartisan legislative analyst said Wednesday he’s forecasting a $2.8 billion budget surplus next year and says California should be able to weather a mild recession without major budget cuts or tax increases over the next four years.

Legislative analyst Mac Taylor’s annual budget outlook sets the stage for negotiations that begin in January when Democratic Gov. Jerry Brown releases his proposed spending plan.

Taylor’s office said the forecast is subject to significant uncertainty, particularly in future years, but it is the best estimate based on available economic indicators.

The projected surplus signals a likely showdown between Brown, who prefers cautious spending growth to prepare for a recession, and Democratic legislators eager to expand state services for people in need.

Brown’s administration urged caution in the face of sluggish state revenue in the summer and fall. October tax collections were $381 million, or 4.7 percent, below projections. Revenue is $1 billion below projections since the administration’s most recent forecast in May.

“With what we know now, the outlook for the upcoming budget is concerning and will need to account for this declining revenue and the significant uncertainties that the analyst has identified today – including stock market performance, the potential for recession, and changes in federal policy,” Michael Cohen, Brown’s director of finance, said in a statement.

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