Friday, May 12, 2017

The May Revise Budget

As noted in a prior blog posting, yours truly is currently in transit. But here are some general points about the governor's May Revise budget proposal for 2017-18. Surpluses and deficits for any fiscal year can be calculated by the change in reserves from the beginning to the end of the year. However, in the California case, we have two reserves: the regular reserve for the general fund and the rainy-day reserve. So you have to add the two reserves together to get a picture of what is happening.

End of Fiscal Year ($Millions)

             2015-16     2016-17     2017-18
Reserve       $4,515        $723      $2,617  
Reserve       $3,420      $6,713      $8,488
Reserve       $7,935      $7,436      $3,669
Expenditure $115,571    $122,322     $11,105
Expenditure     6.9%        6.1%        9.0% 
Data for 2015-16 from enacted budget for 2016-17.
Source: and

Note that the change in the Total Reserve is a deficit of -$499 million for the current fiscal year (2016-17) and a projected surplus for the coming year (2017-18) of +$3,669 million.

The governor provided the usual warnings that the economy will eventually turn down - date to be determined - so reserves should rise and new programs should be avoided. Beyond the business cycle, there is the danger posed by Trumpcare.

In recognition of the brouhaha over the state audit of UC, he made $50 million of the planned allocation for UC contingent on UC doing what the auditor wants. In his news conference presenting the proposal, he said the auditor would determine whether UC is doing what it should. He did say that most people think the UC prez is doing a good job.

Some news accounts about the May Revise are at:

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