California LAO Projects $2 Billion in Additional Revenue
Legislative Analyst Mac Taylor says his office calculates California will receive $2.2 billion more than Brown’s revenue estimate in the coming budget year. Taylor says the higher projection is largely due to capital gains taxes.
“We have higher assumptions about the level of capital gains based on where the markets are and where both of our economic forecasts predict the markets will be over the next 12 months,” he says. “Obviously it’s just an assumption.”
But despite the increased revenue projections there may not be much more money for the legislature to spend. The LAO projects the state will be required to spend most of it on schools, in accordance with Proposition 98.
In a statement, Brown's finance department concurs that, if realized, much of the increased revenue would have to go to schools. The department also says capital gains taxes are volatile and, therefore, temporary.
Taylor gave Brown high marks for his multi-year plan to address the $74 billion funding shortfall in the California State Teachers’ Retirement System.
“Overall we think it’s a bold proposal by the governor, it’s an appropriate one,” Taylor says. “It’s one we think deserves the legislature’s attention to address our single biggest liability that’s out there that they’re currently not addressing.”
The legislature must adopt a budget by the middle of June.