State number-crunchers were reasonably accurate in their forecast of
general fund revenues in November. Revenues were down only $40.8 million (0.7
percent below estimates). But for the first five months of the 2009-10 fiscal year, general fund revenues are still $835 million (2.8
percent) below the forecast made when the budget was passed in July. This is attributable
to personal income tax revenues that are $1.44 billion below projections so
far. Since the PIT is the largest state revenue source, this gap is causing
concern among state fiscal policymakers.
In other budget
news:
Increase to Public Employee Pension Fund
Likely in Next Year's Budget. As
next year's budget is being crafted, an issue being debated is how much general
fund revenue the California Public Employees' Retirement System (CalPERS) should receive. The amount will increase, but by
how much?
According to The Sacramento Bee, the Schwarzenegger
administration is considering giving the agency $4.8 billion, an increase of
$1.5 billion. Payments to the retirement system will be deferred to future
years under a "smoothing plan" The governor believes
"smoothing" is a formula to "pass the buck to our kids."
The legislative analyst's budget deficit forecast assumed that the state would
increase contributions to a $4.1 billion level, so a bigger payment will
require additional strategies to cope with a larger deficit. (Source: The Sacramento Bee, December 6.)
State Debt
Interest Costs Will Surpass $10 Billion, Treasurer Reports. Treasurer Bill Lockyer,
during a December 14 presentation to a legislative budget committee, said
general fund debt service on outstanding bonds, authorized-but-unissued bonds
and proposed water bonds is set to peak in fiscal year 2020 at $10.45 billion,
compared with a current level of approximately $6 billion. That debt interest
cost will stay near the $10.45 billion level through 2028, Mr. Lockyer said.
As of December 1,
California had $83.5 billion of outstanding long-term debt, almost all of it in
fixed-rate bonds. Mr. Lockyer noted that California
has low credit ratings, and thus pays 21.3 percent more in interest than states
with the highest ratings. (Source: Reuters, December 14.)
Cal-TaxReports, December 21, 2009
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Association.
All Rights Reserved.