Today the Legislative Analyst's Office (LAO) released its overview of the Govenor's Proposed Budget, including some cautions about the assumptions underlying the budget.

Click HERE to go to the full report.


THE LAO's REPORT's "Bottom Line"

If the administration's assumptions were to hold, the Governor's proposal would both (1) produce a balanced budget with a healthy reserve in 2007-08 and (2) significantly reduce the state's ongoing structural shortfall. Even if all the budget's proposals were adopted, however, it is likely that the actual amount of budget savings and new revenues would fall short of the levels estimated by the administration. The Governor's key budget proposals raise a number of serious policy and legal issues, which may make their implementation problematic, and the budget's assumptions on matters ranging from the fiscal benefits of its solutions to the outcome of court cases appear to be optimistic. Adverse outcomes in just a few of these areas could easily eliminate most or all of the budget's proposed reserve.

Given the above factors, as well as the continuing existence of the structural budget shortfall facing the state, it will be important that the Legislature develop a more realistic budget which includes alternative budgetary solutions and avoids raising ongoing commitments (absent identified funding to pay for them).