The state’s Legislative Analyst’s Office issued its forecast on fiscal years 2014-15 and 2015-16 in mid-November. With more than half the current fiscal year remaining, the LAO expects a rosy culmination for the state budget.
“We estimate that 2014-15 General Fund revenues will be about $2 billion higher than estimated in this year’s budget act,” the report’s authors stated. In addition, the LAO forecasts continuing improvement in the state’s fiscal condition for 2015-16, which could end with $4.2 billion in reserves.
In 2014-15, personal income and corporation tax revenues are the principal source of the greater revenues. Revenue is projected to grow $5.1 billion this year and an average of more than $4 billion annually through 2019-20.
With increasing revenues, Proposition 98 mandates increased spending for schools and community colleges in both fiscal years. Prop 98 spending is about 40 percent of the total General Fund expenditures. With these required increases, the LAO estimates minimal additional funds available for other programs.
This year’s revenue growth may yield another $177 million (including property tax growth) for schools and community colleges, but next year the increase could be $2.3 billion more than the June projections.
The LAO spending projections also assume increased spending for the state’s university systems.
Already this fiscal year, the state has transferred nearly $70 million to the Cal Fire budget for higher-than-anticipated emergency fire costs. The LAO estimate for this year “some additional emergency fire suppression costs due to the continued threat of wildfire for the remainder of 2014-15.”