New LAO Report on (More) State Revenues

The Legislative Analyst’s Office has released a commentary on the governor’s May Revise budget proposal.  It’s headline feature is that LAO expects higher revenues than the governor projects.  That extra money is not pure gravy since it interacts with the Prop 98 formulas for K-14.  Nonetheless, the report will become part of the legislative process and negotiations which will go on between the governor and legislature.  The governor wants to be cautious and his way of doing it is to tilt toward less optimistic revenue projections.  LAO has a lot of cautionary notes in its report – things that could happen which would cut into revenues – but does not choose, as the governor did, to convey that message via its best guess on revenue projections.

One thing that may help UC in its attempt to pry more pension fund contributions out of the legislature is some combination of the governor saying there is a “wall of debt” that needs to be paid off (including pensions) and the legislature getting a message that there is more money around.  In effect, other things held constant, the more that the legislature puts into the UC pension, the more there is effectively in other resources for UC.

You can find the LAO report at:
http://lao.ca.gov/reports/2013/bud/may-revise/overview-may-revise-051713.pdf

The contrast between the revenue and transfers forecasts for the governor and LAO can be seen below (in $billions):

Fiscal Year | Governor    LAO
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2012-13     |   $98.2    $98.9
2013-14     |   $97.2   $100.0
2014-15     |  $104.5   $107.0
2015-16     |  $110.2   $112.3
2016-17     |  $116.1   $118.9
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Source: Page 12 of the LAO report.