The Legislative Analyst Elizabeth Hill today released her analysis of the governor’s proposed budget for 2007-08. What’s the bottom line on the budget proposal, from her point of view? Hill says that the budget result in a $726 million deficit as opposed to the Administration’s projection of a $2.1 billion reserve.
Here are a few noteworthy excerpts from the analysis’ highlights. All of the documents can be accessed here.
* Based on our projections, we estimate that the Governor’s budget plan would result in 2007-08 expenditures exceeding revenues by $2.6 billion. This would leave the state with a $726 million year-end deficit, compared to the Governor’s January 10th estimate of a $2.1 billion positive reserve.
* In addition, the state would face operating deficits of $3.4 billion in 2008-09, $2.5 billion in 2009-10, and $1.4 billion in 2010-11.
* Thus, additional solutions will be needed to bring the budget into balance, such as budgetary savings, enhanced resources, or reduced supplemental payments toward paying off budgetary debt. It will also be important to avoid raising ongoing budget commitments without identifying alternative reductions or new revenues to pay for them.
* Following two years of significant growth, revenues in 2006-07 appear to have slowed sharply, reflecting the more moderate economic expansion and a dip in income from capital gains.
* We forecast that revenues and transfers will fall below the budget forecast for the current and budget years combined by about $2 billion, primarily reflecting our weaker personal income tax projections.
* Despite some repayment progress in recent years, the state would still have $18 billion in budgetary debt outstanding at the close of the budget year. General Fund costs related to this debt would be $4.1 billion in 2007-08 and peak at $4.5 billion the following year.
* The Governor has announced a comprehensive health care reform proposal aimed at ensuring that all Californians have health care coverage. While not reflected in the budget plan, the proposal is an important starting point for discussions on health care expansion in