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Tuesday, January 16, 2024

Omitted from the LAO's Preliminary Comments

We earlier reviewed the governor's budget proposal for fiscal year 2024-25.* Traditionally, when the governor makes a proposal, the LAO provides initial comments and then subsequently provides more detailed reviews of particular components of the budget. The preliminary review is out and its macro message - which was known before - was that the governor's revenue estimates are more optimistic than those of the LAO. But, it also says the governor's estimates for revenue are within the bounds of reasonableness.

Much of the report, unfortunately, is devoted to the arcane subject of defining the problem which the news media sometimes misleadingly call the "deficit." For reasons we needn't go into here, that issue is largely irrelevant to good policy making and just contributes to confusion.

From the UC point of view, there is a glaring omission in the LAO's comments. The governor is deviating from the compact's "guarantee" to UC. He calls it a deferral, but whatever it is, it is a violation of the compact. Hopefully, when the LAO gets around to more detailed comments, it will go into that issue.

You can find the report at https://lao.ca.gov/reports/2024/4825/2024-25-Overview-Governors-Budget-011324.pdf.

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