One interpretation of the seeming puzzle of why Gov. Brown let his final budget for 2018-19 go into deficit is that he overshot his planned surplus for 2017-18. Or he may believe that 2018-19 will repeat what happened in 2017-18, i.e., that revenues will turn out to be underestimated, pushing the planned deficit into a surplus. That is, a year from now, his budgetary legacy will not be tarnished by a final deficit. Still another interpretation is that since no one seems to have noticed the planned deficit for 2018-19, and since budgetary language in state finance is notoriously fuzzy, he can just say his final budget is in surplus simply because there is money in the till, even if it is declining.
As they say, time will tell.
Table 1: California
Budget Summary
$ Millions 2017-18 2017-18 2018-19
Enacted June 2018 June 2018
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GF Reserve
Start of Year $1,622
$5,702 $8,483
Revenue &
Transfers $125,880
$129,825 $133,332
Expenditures $125,096
$127,044 $138,688
GF Surplus/Deficit +$784
+$2,781 -$5,356
GF Reserve
End of Year $2,406
$8,483 $3,127
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BSA-Start of Year $6,713
$6,713 $9,410
BSA-End of year $8,486
$9,410 $13,768
BSA Surplus/Deficit +$1,773
+$2,697 +$4,358
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Safety Net Reserve*
Start of Year na
na $0
End of Year na
na $200
Safety Net Reserve*
Surplus/Deficit na
na +$200
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Total Reserves
Surplus/Deficit +$2,557
+$5,478 -$798
Total Ending Reserves $10,892 $17,893
$17,095
As % of Expenditures 8.7%
14.1% 13.0%
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GF = General Fund
BSA = Budget Stabilization Account
(“rainy day fund”)
*The “Safety Net Reserve” is a fund
created for the 2018-19 budget that avoids certain limits in the formula
governing the BSA.
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