As readers of this blog will know, UC’s budget is still threatened by a possible pulling of a budget “trigger” if forecast revenues do not arrive as anticipated. What the legislature did when it enacted this fiscal year’s budget was to assume incremental revenue – but not raise taxes (or prevent the end of temporary taxes) to generate that additional revenue. Having made the assumption, it could then pass the budget by simple majority vote, i.e., without the 2/3 vote that a tax increase or extension would have required which would have entailed Republican votes.
All budgets are based on revenue forecasts and the forecasts are made on a tax-by-tax basis, i.e., so much for income tax, so much for sales tax, etc. In this go-round, however, the legislature kept its forecast on a tax-by-tax basis and then just added an “unallocated revenue increase.” Effectively, the legislature said there will be more revenue, but we don’t know exactly in which pot it will appear.
Above you see a table from the Dept. of Finance of actual and forecast revenue for the first quarter of the current fiscal year (July-Sept.). $775 million in extra incremental revenue was supposed to appear from we-know-not-where. (Look at the line for unallocated revenue increase towards the bottom.) However, in total actual revenue fell short of forecast total revenue by $654 million. Given the vagaries of forecasting, there is not much difference between what actually came in and what was anticipated to come in, absent the we-know-not-where money. In short, the old budget forecast – based on the May revise before the assumption was added - was about right. If things continue on the current track, there is a definite likelihood that the trigger will be pulled – unless, of course, the governor and legislature decide not to let it be pulled.
The full Dept. of Finance report is at http://www.dof.ca.gov/finance_bulletins/2011/october/
But maybe the money will magically arrive: