LAO critical of Governorís May Revise

By CMTA Staff

Capitol Update, May 23, 2008 Share this on FacebookTweet thisEmail this to a friend

Upon review of the Governor’s May Revise budget plan that has cited a $15.2 billion budget shortfall, the non-partisan Legislative Analyst (LAO), Elizabeth Hill, has indicated that she believes the Governor’s budget plan utilizes overly optimistic revenue projections.  More specifically, she suggested that his plan to borrow $15 billion from future proceeds associated with the California State Lottery would significantly hinder funding for schools (in the billions) for years to come.  As an alternative, she proposed borrowing against lottery income on a smaller scale, raising $5.6 billion over two years to help close the state's budget gap.

The LAO also questioned Schwarzenegger's plans for a "rainy-day" account, suggesting it was far too complicated and seriously flawed.  She noted that the Governor's plan would only provide an opportunity to utilize the funds when revenues fall by a specific rate.  If the revenues do not decline according to the specified rate, the state would be required to make automatic cuts up to five percent each year that could result in significant across-the-board reductions that do not address the imbalance between income and spending. 

Finally, the LAO noted that the Governor's proposed budget-system changes would also undermine the Legislature's constitutional authority over spending decisions.

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