UC Like a Flea on an Elephant in Latest LAO Budget Report

Maybe the biggest lesson to take away from the LegislativeAnalyst’s Office latest report on the state budget – responding to the governor’sbudget proposal – is that UC is a flea on the back of an elephant.  We are hardly mentioned, other than a referenceto possible trigger cuts next year if Governor Brown’s tax initiative isn’tpassed by voters.

Much of the report focuses on the world of Prop 98, i.e.,K-14 schools, not surprisingly since that is such a large chunk of the budget.

The LAO is concerned about possible over-optimism in Brown’sbudget projections.  Just a few days ago,however, the Brown projections were criticized by a highly-regarded privateforecaster as too pessimistic.  Thedivergence underscores the point made in an earlier post on this blog on the budget:forecasting cannot be precise.

 

Editorial comment: The uncertainty over budget forecastsshould give pause to various do-good groups who think our budgetary problemswould be solved by going to a two-year budget. Note that in the current one-year regime, we have considerableuncertainty forecasting 18 months ahead (since the budget year begins July 1,2012 and ends June 30, 2013).  Theproposed two-year regime would require a forecast 30 months ahead,substantially raising the level of uncertainty.  

Editorial prediction: It should give them pause, but it won’t.

The LAO report is at http://lao.ca.gov/reports/2012/bud/budget_overview/budget-overview-011112.pdf

Comments on the Brown budget proposal by forecaster Chris Thornberg are at http://blogs.sacbee.com/capitolalertlatest/2012/01/economist-says-jerry-browns-budget-underestimates-revenue.html