LAO Cautions the Legislature

The Legislative Analyst's Office (LAO) has issued a report on the governor's May Revise state budget for 2023-24. Its general theme is that the outyears don't look good and, therefore, there should be reductions in spending below what the governor has proposed.

It might be noted that the revenue side of the budget in California is heavily driven by the direction of the overall economy and movements in financial markets. Economic forecasting of the general economy is difficult and financial markets are erratic. That's why, for example, the UCLA Anderson Forecast has been offering two scenarios - recession and no recession - rather than a firm single forecast. (We'll see if the Forecast continues this practice when it issues its next report in June.)

As blog readers will know, there was some hope expressed at last week's Regents meetings that the legislature might provide some additional funds to UC at the margin. If the legislature follows the advice of the LAO, such extras would be unlikely to be forthcoming.

You can read the LAO report at:

https://lao.ca.gov/reports/2023/4772/Multiyear-Budget-Outlook-052323.pdf.