Highlights & Analysis of the 2011-12 Governor's Budget

Monday, January 31, 2011

Read Full Analysis (58-page PDF)

The Governor has projected a General Fund budget deficit of $25.4 billion ($8.2 billion in 2010-11 and $17.2 billion in 2011-12). This is the same as the Legislative Analyst’s November 2010 estimate of $25.4 billion (a $6.1 billion projected deficit for 2010-11 and a $19.3 billion gap between projected revenues and spending in 2011-12) though it is arrived at through a different methodology.

Governor Brown proposes $26.4 billion in solutions ($25.4 billion problem plus $1 billion reserve) that include $12.5 billion of Expenditure Reductions, $12 billion in Revenues, and $1.9 billion of Other (primarily one-time special fund loans and transfers). However, it appears that about $4.6 billion of "Expenditure Reductions" are actually from "Fund Shifts" such as redirecting Redevelopment Agency ($1.7 billion), Proposition 10 and 63 revenues ($1.9 billion), and Transportation Weight Fees ($1.0 billion). In addition, the "Revenues" are actually $14 billion ($13.8 billion of tax increases), but cleverly offset by a negative $2 billion adjustment to reflect Proposition 98 interaction (i.e., the Proposition 98 share of new tax revenue).

An honest accounting would reflect $28.4 billion of solutions ($27.4 billion problem plus $1 billion reserve) with $8 billion of Expenditure Reductions, $14 billion of Revenue, and $6.4 billion of Other - not quite the "balanced" approach promoted by the Governor.

Read Full Analysis (58-page PDF)