The summary appears to contain at least one error. The ending general fund reserve for 2020-21 should be the same as the beginning general fund reserve for 2021-22, but the assembly version shows a difference. Most likely different and inconsistent estimates for the two years were used on the table. We use the end reserve for 2020-21 as the beginning reserve for 2021-22 in the table below. "Final" numbers - presumably without inconsistent figures - will eventually be available from the Dept. of Finance and the Legislation Analyst's Office some time in July. However, our table below provides a general overview of what was enacted.
The general fund - essentially that state's day-to-day checking account - has a reserve in it. Other reserves linked to the general fund are the Public School account, the Safety Net account, and the Budget Stabilization account ("rainy day fund"). You need to sum the reserves and see if they are collectively rising or falling to determine the surplus or deficit. As the table shows, during 2020-21 (the fiscal year ending today), we ran a budget surplus of something like $20 billion. Next year we will run a deficit of about $16 billion which will bring down reserves, although they will remain at a relatively high level compared with expenditures. How we will adjust to the situation that will prevail a year from now when a new budget will be needed is anyone's guess. The legislature and governor will not be so flush with cash if the forecasts underlying the budget just enacted are correct.
Why, in the midst of a pandemic which produced a sharp downturn and slump, is the state flush with cash? Basically, the pessimistic outlook a year ago caused the state to cut back expenditures due to a projection of a revenue curtailment. But because state revenue is heavily dependent on the income tax and the income tax is heavily dependent on high earners, revenues did not drop as expected. In addition, funding came in from the federal government.
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