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Friday, July 1, 2011

LAO State Budget Estimates

The Legislative Analyst has produced a preliminary state budget analysis. The full publication is at http://www.lao.ca.gov/handouts/Econ/2011/Summary_Tables.pdf but the table above is a summary. If you look at "revenue & transfers" (keeping in mind that "transfers" can hide mischief) vs. expenditures, you can see that the budget year that ended June 30 was estimated to be in surplus ($94.781 billion - $91.480 billion = a surplus of +$3.301 billion). The new budget year - assuming sufficient revenue - runs another surplus ($$88.456 billion - $85.937 billion = a surplus of +$2.519 billion). Running these estimated and assumed surpluses restores the general fund to a positive balance by the end of the new fiscal year.

The object is therefore not a gradual workout budget over a period of years but a quick erasing of past budgetary sins. Once that choice was made, the squeeze on the UC budget was a certainty since the legislature and the governor know that UC can always raise tuition as an alternative funding source. Other programs, e.g., prisons, don't have such external revenue possibilities.

There will be a Regents meeting in July. The underlying issue at that meeting, if the Regents choose to confront it, is a long run funding model for the university, given the evident budget problems of the state and the slack economy.

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