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Posted by: thepinetree on 02/21/2024 09:54 AM
Updated by: thepinetree on 02/21/2024 09:58 AM
Expires: 01/01/2029 12:00 AM
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Under LAO Revenue Update, CA Budget Problem Could Reach $73 Billion
Sacramento, CA...The state already faces a significant deficit this year—we estimate it totaled $58 billion under the administration’s revenue forecast at the time the Governor’s budget was proposed in January. However, recent revenue collections data reflect even further weakness relative to those estimates. Specifically, our forecast is about $24 billion below the Governor’s budget across 2022‑23 to 2024‑25. All else equal, this means the budget problem is likely to be higher at the time of the May Revision. The actual increase in the state’s budget problem will depend on a number of factors, including formula-driven spending changes, most notably Proposition 98 spending requirements for schools and community colleges. (Due to specific circumstances this year, changes in revenues are unlikely to have a significant effect on the state’s other major formula-driven spending requirements, specifically related to Proposition 2.) Roughly, a $24 billion erosion in revenues corresponds to a $15 billion increase in the budget problem. This would expand the $58 billion estimated deficit to $73 billion under our updated revenue forecast.
Options to Address $15 Billion in Additional Budget Problem
If the budget problem increases by $15 billion, the Legislature will need to find a like amount of new budget solutions to ensure the budget is balanced for 2024‑25. Budget solutions include, for example: revenue increases and spending reductions (on both a one-time and ongoing basis), as well as other tools, like reserves and cost shifts. As the Legislature considers how to address this increased budget problem, we have put together a set of tables identifying one-time and temporary spending that could be pulled back or reduced in order to achieve budgetary savings. Below, we explain why we set forth these amounts as a possible first option to addressing a larger budget problem and then walk through our method for estimating the amounts potentially available in more detail.
Why Reduce One-Time and Temporary Spending?
The Legislature will weigh the implications of each possible solution—including increasing revenues and spending reductions—against others and, ultimately, choose a mix of solutions based on its priorities. We recommend the Legislature start by reviewing whether recent augmentations for one-time and temporary spending could be pulled back or reduced. We recommend this approach for two key reasons. First, when this one-time and temporary spending was adopted, it was understood that doing so would provide a cushion for future budget problems. For example, the administration frequently displayed “operating surpluses” in its multiyear forecasts excluding this type of spending—implying that the administration understood that the state could not afford all of the commitments under its own projections, but the state could afford the ongoing budget.
Second, the more the Legislature reduces one-time and temporary spending this year, the more other tools it can preserve for future budget problems. Reducing one-time and temporary spending is a “use or lose” tool for addressing the budget problem—once the funds are disbursed to recipients, pulling them back becomes practically impossible. Other tools, like reserve withdrawals and cost shifts, also can be used only once, but at any time. Saving them to deploy in the future can help the Legislature avoid cuts to ongoing services—which involve very difficult decisions. For example, in the Great Recession, the programs with some of the largest expenditure reductions were in health and human services, including to Medi-Cal, which provides health coverage to low-income individuals and the California Work Opportunity and Responsibility to Kids (CalWORKs) program, which provides income assistance to low-income individuals. Although the federal government has certain requirements for minimum state participation in these programs, California provides services well above these minimums. As a result, reductions tend to be concentrated in these areas because they are the ones where the state has the most flexibility to reduce spending without raising issues related to requirements imposed by courts, the voters, and the federal government. As such, maintaining other tools like reserves and cost shifts now could help mitigate reductions in these areas in the future.
Options Possibly Available to Reduce One-Time and Temporary Spending
State Allocated Large Shares of Surpluses to Temporary Purposes, Although Some Has Been Disbursed or Already Proposed for Reduction. Recent budgets allocated tens of billions of dollars in surpluses to one-time and temporary spending, including in 2023‑24, 2024‑25, and 2025‑26. Some spending, most notably for 2023‑24, has already been disbursed or encumbered. This means, for example, that grants have been awarded, funds have been transferred to other entities of government, and contracts or leases have been signed. (In some cases, funds have also been committed for 2024‑25 and 2025‑26, for example, through grant awards.) In addition, the Governor has already proposed pulling back much—but not all—of the undisbursed spending associated with these augmentations.
State Has Nearly $16 Billion in Recent One-Time and Temporary Spending That Could Possibly Still Be Pulled Back or Reduced. After setting aside disbursements and Governor’s budget proposals, we estimate the state possibly could pull back and reduce one-time and temporary augmentations by as much as $6.4 billion in 2023‑24, $4.1 billion in 2024‑25, and $5.1 billion in 2025‑26. Figure 1 shows the distribution of these amounts by program area, while the Appendix includes a complete list of them. These figures represent our current estimates of the amounts for which the Legislature has broad authority to make reductions, which could help the state address a larger budget problem in May. (In some cases, however, further disbursements could occur between now and May, such smaller amounts would be available for reduction at that time.)
Figure 1
Summary of Possible Remaining One‑Time and Temporary Spending
(In Millions)
|
2023‑24 |
2024‑25 |
2025‑26 |
| Business and Labor |
$266 |
$284 |
$198 |
| Criminal Justice |
130 |
40 |
— |
| Education |
602 |
1,195 |
1,109 |
| Health and Human Services |
867 |
301 |
701 |
| Housing and Homelessness |
1,599 |
— |
260 |
| Other |
1,752 |
557 |
432 |
| Resources and Environment |
1,049 |
1,005 |
1,377 |
| Transportation |
146 |
739 |
1,000 |
| Totals |
$6,411 |
$4,121 |
$5,076 |
| Note: Amounts reflect one‑time and temporary spending adopted in the 2021 and 2022 budget packages. |
This Information Reflects Our Best Current Understanding. While these estimates reflect the best information we have available, in many cases we do not have perfect information from the administration about the current status of funds. As such, we would view this list as a starting place for the Legislature as it begins crafting the final budget package. For any specific reductions, particularly in 2023‑24, the Legislature could ask the administration for detailed and up-to-date information on disbursements and encumbrances.
More Could Be Pulled Back From Earlier Years. For the purposes of this analysis, we only reviewed disbursements and encumbrances authorized for 2023‑24 and later. There is, however, additional spending attributable to 2022‑23 and earlier that has not yet been disbursed. The Legislature could ask the administration to provide information about the amount of unspent funds from these earlier years.
Appendix Tables
Appendix Figure 1
Possible Remaining One‑Time and Temporary Spending:
Business and Labor
(In Millions)
Department/
Program Area |
Description |
2023‑24 |
2024‑25 |
2025‑26 |
| EDD |
New IT overhaul—EDDNext |
$99 |
— |
— |
| GO Biz |
California Competes Grants |
10 |
— |
— |
| HCAI |
Health and home care workforce package |
85 |
$259 |
$198 |
| HCAI |
Behavioral health workforce capacity |
52 |
— |
— |
| HCAI |
Various other health care workforce initiatives |
20 |
25 |
— |
| Totals |
|
$266 |
$284 |
$198 |
Note: This table includes allocations from the 2021 and 2022 budget packages that remain after accounting for Governor’s budget proposals and known disbursements and encumbrances, as of February 2024. In some cases our office does not have full information on disbursements from the administration, which means these estimates reflect our best understanding at this time.
Note: Amounts reflect one‑time and temporary spending adopted in the 2021 and 2022 budget packages. |
| EDD = Employment Development Department; IT = information technology; GO Biz = Governor’s Office of Business and Economic Development; and HCAI = Department of Health Care Access and Information. |
Appendix Figure 2
Possible Remaining One‑Time and Temporary Spending:
Criminal Justice
(In Millions)
Department/
Program Area |
Description |
2023‑24 |
2024‑25 |
2025‑26 |
| BSCC |
Adult Reentry Grant |
$20 |
— |
— |
| CDCR |
Expansion of community reentry centers |
40 |
$40 |
— |
| CDCR |
Various capital projects at San Quentin Rehabilitation Center |
20 |
— |
— |
| OES |
Nonprofit Security Grant Program |
40 |
— |
— |
| OES |
Family Justice Centers |
10 |
— |
— |
| Totals |
|
$130 |
$40 |
— |
Note: This table includes allocations from the 2021 and 2022 budget packages that remain after accounting for Governor’s budget proposals and known disbursements and encumbrances, as of February 2024. In some cases our office does not have full information on disbursements from the administration, which means these estimates reflect our best understanding at this time.
Note: Amounts reflect one‑time and temporary spending adopted in the 2021 and 2022 budget packages. |
| BSCC = Board of State and Community Corrections; CDCR = California Department of Corrections and Rehabilitation; and OES = Governor’s Office of Emergency Services. |
Appendix Figure 3
Possible Remaining One‑Time and Temporary Spending:
Education
(In Millions)
Department/
Program Area |
Description |
2023‑24 |
2024‑25 |
2025‑26 |
| CSAC |
Golden State Teacher Grants |
$91 |
$128 |
$1 |
| CSU |
CSU Dominguez Hills Dymally Institute facility |
15 |
— |
— |
| DGS |
State share for school construction projects |
472 |
994 |
485 |
| DGS |
Construction and renovation of transitional kindergarten, State Preschool, and full‑day kindergarten facilities |
— |
— |
550 |
| OPR |
California College Corps Program |
— |
73 |
73 |
| UC |
Cancer Research Relating to Firefighters |
7 |
— |
— |
| UC |
UC Berkeley School of Journalism Police Records Access Project |
7 |
— |
— |
| UC |
UC Los Angeles Ralph J. Bunche Center |
5 |
— |
— |
| UC |
UC Davis Equine Performance and Rehabilitation Center |
5 |
— |
— |
| Totals |
|
$602 |
$1,195 |
1,109 |
Note: This table includes allocations from the 2021 and 2022 budget packages that remain after accounting for Governor’s budget proposals and known disbursements and encumbrances, as of February 2024. In some cases our office does not have full information on disbursements from the administration, which means these estimates reflect our best understanding at this time.
Note: Amounts reflect one‑time and temporary spending adopted in the 2021 and 2022 budget packages. |
| CSAC = Student Aid Commission; DGS = Department of General Services; and OPR = Governor’s Office of Planning and Research. |
Appendix Figure 4
Possible Remaining One‑Time and Temporary Spending:
Health and Human Services
(In Millions)
Department/
Program Area |
Description |
2023‑24 |
2024‑25 |
2025‑26 |
| CalHHS |
Health innovation accelerator initiative |
— |
— |
$43 |
| CDPH |
Carryover from certain one‑time funds in previous years |
$268 |
— |
— |
| CDPH |
COVID‑19 response |
25 |
— |
— |
| CDPH |
Public health IT systems |
9 |
— |
— |
| CDPH |
Public education and change campaign |
— |
$40 |
5 |
| Aging |
Modernizing the Older Californians Act |
— |
37 |
37 |
| DHCS |
Behavioral Health Bridge Housing program |
— |
— |
235 |
| DHCS |
Behavioral Health Continuum Infrastructure Program |
— |
100 |
381 |
| DHCS |
Evidence‑based and community‑defined behavioral health programs |
— |
109 |
— |
| DSS |
CalFresh minimum nutrition benefit pilot |
— |
15 |
— |
| HCAI |
Carryover from certain one‑time funds in previous years |
565 |
— |
— |
| Totals |
|
$867 |
$301 |
$701 |
Note: This table includes allocations from the 2021 and 2022 budget packages that remain after accounting for Governor’s budget proposals and known disbursements and encumbrances, as of February 2024. In some cases our office does not have full information on disbursements from the administration, which means these estimates reflect our best understanding at this time.
Note: Amounts reflect one‑time and temporary spending adopted in the 2021 and 2022 budget packages. |
| CalHHS = Health and Human Services Agency; CDPH = California Department of Public Health; Aging = Department of Aging; DHCS = Department of Health Care Services; DSS = Department of Social Services; and HCAI = Department of Health Care Access and Information. |
Appendix Figure 5
Possible Remaining One‑Time and Temporary Spending:
Housing and Homelessness
(In Millions)
Department/
Program Area |
Description |
2023‑24 |
2024‑25 |
2025‑26 |
| BCH Agencya |
Homeless Housing, Assistance, and Prevention Program (HHAPP) |
$1,100 |
— |
$260 |
| BCH Agency |
Encampment Resolution Grants |
299 |
— |
— |
| HCD |
Portfolio Reinvestment Program |
100 |
— |
— |
| HCD |
Multifamily Housing Program |
75 |
— |
— |
| HCD |
Infill Infrastructure Grant Program |
25 |
— |
— |
| Totals |
|
$1,599 |
— |
$260 |
| aBy the time the HHAPP costs are incurred, the program will have transferred to from BCSH Agency to HCD. |
Note: This table includes allocations from the 2021 and 2022 budget packages that remain after accounting for Governor’s budget proposals and known disbursements and encumbrances, as of February 2024. In some cases our office does not have full information on disbursements from the administration, which means these estimates reflect our best understanding at this time.
Note: Amounts reflect one‑time and temporary spending adopted in the 2021 and 2022 budget packages. |
| BCH Agency Business, Consumer Services, and Housing Agency and HCD = Department of Housing and Community Development. |
Appendix Figure 6
Possible Remaining One‑Time and Temporary Spending:
Other
(In Millions)
Department/
Program Area |
Description |
2023‑24 |
2024‑25 |
2025‑26 |
| CDT |
Broadband infrastructure—increased middle‑mile network costs |
$420 |
$250 |
— |
| CPUC |
Broadband infrastructure—last‑mile projects |
900 |
100 |
$200 |
| CPUC |
Broadband infrastructure—Broadband Loan Loss Reserve Fund |
175 |
150 |
175 |
| GO‑Biz |
Fresno Infrastructure Plan |
50 |
— |
— |
| OPR |
Establish new office of public outreach |
60 |
57 |
57 |
| SCO |
California State Payroll System |
147 |
— |
— |
| Totals |
|
$1,752 |
$557 |
$432 |
Note: This table includes allocations from the 2021 and 2022 budget packages that remain after accounting for Governor’s budget proposals and known disbursements and encumbrances, as of February 2024. In some cases our office does not have full information on disbursements from the administration, which means these estimates reflect our best understanding at this time.
Note: Amounts reflect one‑time and temporary spending adopted in the 2021 and 2022 budget packages |
| CDT = California Department of Technology; CPUC = California Public Utilities Commission; GO‑Biz = Governor’s Office of Business and Economic Development; OPR = Governor’s Office of Planning and Research; and SCO = State Controller’s Office. |
Appendix Figure 7
Possible Remaining One‑Time and Temporary Spending:
Resources and Environment
(In Millions)
Department/
Program Area |
Description |
2023‑24 |
2024‑25 |
2025‑26 |
| CalEPA |
Environmental Justice Initiative (Community Resilience Package) |
$5 |
— |
— |
| CalFire |
Post‑fire reforestation and regeneration (Wildfire Resilience Package) |
50 |
— |
— |
| CalFire |
Emergency surge (helitanker contract component) |
45 |
$45 |
— |
| CalFire |
Forest Improvement Program (Wildfire Resilience Package) |
13 |
— |
— |
| CalFire |
Tribal engagement (Wildfire Resilience Package) |
10 |
— |
— |
| CARB |
FARMER program |
75 |
— |
— |
| CARB |
Clean Cars 4 All (ZEV Package) |
50 |
— |
— |
| CARB |
AB 617 (Community Resilience Package) |
50 |
— |
— |
| CARB |
Equitable Building Decarbonization (Energy Package) |
20 |
— |
— |
| CEC |
Clean Energy Reliability Investment Plan (SB 846) |
100 |
400 |
$500 |
| CEC |
Distributed Electricity Backup Assets (Energy Package) |
100 |
25 |
25 |
| CEC |
Demand Side Grid Support (Energy Package) |
95 |
— |
— |
| CEC |
Equitable Building Decarbonization (Energy Package) |
— |
53 |
92 |
| CNRA |
Water resilience projects (Drought‑Water Resilience Package) |
171 |
— |
— |
| CNRA |
Tribal nature‑based solutions program (Nature‑Based Solutions Package) |
30 |
— |
— |
| CPUC |
Residential Solar and Storage (Energy Package) |
— |
50 |
100 |
| DTSC |
Brownfield cleanups |
— |
85 |
15 |
| DWR |
Flood and dam safety (Drought‑Water Resilience Package) |
53 |
— |
— |
| DWR |
Oroville Pump Storage (Energy Package) |
4 |
10 |
20 |
| DWR |
American River flood project |
— |
27 |
— |
| DWR |
Urban flood risk reduction |
— |
35 |
— |
| DWR |
Strategic Reliability Assets (Energy Package) |
— |
75 |
75 |
| DWR |
Water conveyance, water storage (Drought‑Water Resilience Package) |
— |
— |
500 |
| Go‑Biz or CNRA |
Diablo Canyon land use planning |
— |
— |
50 |
| IBank |
Transmission Financing (Energy Package) |
25 |
— |
— |
| OPC |
Ocean protection (Coastal Resilience Package) |
13 |
— |
— |
| OPC |
Coastal resilience SB 1 implementation (Coastal Resilience Package) |
1 |
— |
— |
| OPR |
Community‑Based Public Awareness Campaign (Extreme Heat Package) |
14 |
— |
— |
| SWRCB |
Water recycling, groundwater cleanup (Drought‑Water Resilience Package) |
17 |
— |
— |
| SWRCB |
Drinking water and wastewater projects (Drought‑Water Resilience) |
— |
200 |
— |
| Various |
Misc Nature‑Based Solutions Package |
9 |
— |
— |
| Various |
Misc Wildfire Resilience Package |
5 |
— |
— |
| WCB |
Protect fish and wildlife from changing conditions (Nature‑Based Solutions) |
49 |
— |
— |
| WCB |
Various WCB programs (Nature‑Based Solutions Package) |
46 |
— |
— |
| Totals |
|
$1,049 |
$1,005 |
$1,377 |
Note: This table includes allocations from the 2021 and 2022 budget packages that remain after accounting for Governor’s budget proposals and known disbursements and encumbrances, as of February 2024. In some cases our office does not have full information on disbursements from the administration, which means these estimates reflect our best understanding at this time.
Note: Amounts reflect one‑time and temporary spending adopted in the 2021 and 2022 budget packages |
| CalEPA = California Environmental Protection Agency; CalFire = California Department of Forestry and Fire Protection; CARB = California Air Resources Board; CEC = California Energy Commission; CNRA = California Natural Resources Agency; CPUC = California Public Utilities Commission; DTSC = Department of Toxics and Substances Control; DWR = Department of Water Resources; Go‑Biz = Governor’s Office of Business and Economic Development; IBank =California Infrastructure and Economic Development Bank; OPC = Ocean Protection Council; OPR = Governor’s Office of Planning and Research; SWRCB = State Water Resources Control Board; and WCB = Wildlife Conservation Board. |
Appendix Figure 8
Possible Remaining One‑Time and Temporary Spending:
Transportation
(In Millions)
Department/
Program Area |
Description |
2023‑24 |
2024‑25 |
2025‑26 |
| Caltrans |
Clean California |
$146 |
— |
— |
| CalSTA |
Transit and rail funding (Transportation Infrastructure) |
— |
$739 |
$1,000 |
| Totals |
|
$146 |
$739 |
$1,000 |
Note: This table includes allocations from the 2021 and 2022 budget packages that remain after accounting for Governor’s budget proposals and known disbursements and encumbrances, as of February 2024. In some cases our office does not have full information on disbursements from the administration, which means these estimates reflect our best understanding at this time.
Note: Amounts reflect one‑time and temporary spending adopted in the 2021 and 2022 budget packages. |
| Caltrans = California Department of Transportation and CalSTA = California State Transportation Agency. |
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| Comments - Make a comment |
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No Subject
Posted on: 2024-02-21 10:00:01
By: Anonymous
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One party rule is grand?
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Re:
Posted on: 2024-02-21 10:16:29
By: Anonymous
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^^^ They haven't even added up what illegal immigrants cost the state.
When Biden bows out of running in 2024, people sure as hell won't want Gavin Nuisance. CA is the worst financially run state in the Nation. Add in the fact CA has, under Democrats, The Worst Quality Of Life in the Nation. Add in the Fact, CA is the least educated state in America Of Adults aged 25 Plus. Add to the Fact, the CA liberal Democrats are so stupidly ignorant, they're clueless of those facts.🤣🤣
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Re:
Posted on: 2024-02-21 10:27:27
By: Anonymous
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And the Dems wrote the report. So the deficit it probably in actuality 2 or 3 times this amont
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Re:
Posted on: 2024-02-21 21:05:53
By: Anonymous
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Think about the following sentence. James Comer, and Jim Jordan in using information from a Russian Operative in their scheme to have Joe Biden impeached, are guilty of COLLUDING with Russia and its operatives. Think about it.
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Biden can barely walk these days
Posted on: 2024-02-21 10:06:25
By: Anonymous
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President Biden, yet again, has tripped twice while boarding Air Force One — despite using a shorter, less challenging staircase.
The 81-year-old commander-in-chief managed to narrowly avoid a complete double tumble as he prepared to set off for Los Angeles on Tuesday.
Footage of the near-miss showed Biden saluting US military personnel at the bottom of the staircase before starting his climb at Andrews Air Force Base, Md.
Joe Biden is so old, weak, feeble, and senile he can't even board Air Force One's shorter entrance and still not get tired and tripping.
MY GOD, NO WONDER EVERY COUNTRIES LEADERS LOOK AT JOE AND SMELL DEATH. WHAT AN EMBARRASSMENT!!!
[Reply
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Re: Biden can barely walk these days
Posted on: 2024-02-21 10:29:42
By: Anonymous
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Cargo Hole Joe that fuker needs a escalator!
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Re: Biden can barely walk these days
Posted on: 2024-02-21 12:16:42
By: Anonymous
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And Gavin thinks he's presidential material. He can't even run Calif.
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Re: Biden can barely walk these days
Posted on: 2024-02-21 14:27:32
By: Anonymous
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And your surprised? The federal budget, California’s budget, San Francisco’s budget, on and on. The question is what are taxpayers going to do and when? So, joe falls a lot however does it really matter? Do you really think that he is a factor in anything? This is Obama’s third term!
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Re: Biden can barely walk these days
Posted on: 2024-02-21 14:44:15
By: Anonymous
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Think about this! The CA budget shortfall just for this year is $2,075 per CA resident. Not per taxpayer but per resident.
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Re: Biden can barely walk these days
Posted on: 2024-02-21 16:27:27
By: Anonymous
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Ouch! Does that include illegals?
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Re: Biden can barely walk these days
Posted on: 2024-02-21 21:18:43
By: Anonymous
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Sure wouldn't want to be Comer Pyle or Jim "the wrestler" Jordan right now!
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
They are in bed with Russian Operatives.
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
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