Get It While You can

The state controller's cash report is out for the first seven months of fiscal 2025-26 and - guess what? - revenues are running ahead of the forecast made at the time the current state budget was passed to the tune of $15 billion. Indeed, revenues are running ahead of the updated forecast made last month when the governor made his budget proposal for next year to the tune of $6.9 billion.

Now, we all know that much of this overage seems to be fueled by AI spending, which filters into tax revenues by way of the stock market and capital gains. And we all know that it could be a bubble and that - if it is - revenues will slump when it bursts, i.e., we could have a repeat of the dot-com boom/dot-com bust. If that happens, revenues will drop and a crisis will occur. 

We know, in addition, that the Legislative Analyst's Office keeps warning of a "structural" budget problem in the years to come. And blog readers will know that even with the governor's optimistic forecast for the economy, we are currently running a deficit (total reserves of the general fund are being drawn down).* We know from the dot-com boom/bust episode that if the state is not socking away a lot of cash at the peak of the cycle, a downturn will be especially painful.

With all of that knowledge, however, it is unlikely that the legislature is going to accept austerity now when it sees extra revenue coming in. And the governor, who is running for president and is termed out, seems unlikely to want to play Dr. No. If he can just make it to next January without a fiscal mess developing, he can say it didn't happen on his watch, and leave whatever problems that follow to his successor. 

So, the best advice yours truly can give to UC lobbyists is "Get It While You Can" - because every other interest group will be seeing what I see.

Or direct to https://www.youtube.com/watch?v=mtj9w2gYzV4.

===

*https://uclafacultyassociation.blogspot.com/2026/01/the-no-hassles-while-im-in-office-state.html.