Today, the
2024-25 Budget: California’s Fiscal Outlook was
published by the Legislative Analyst’s Office (LAO). At this
time, the LAO forecasts a state budget deficit of $68 billion in
fiscal year 2024-25 due mostly to the net effect of unexpected
revenue changes in 2022-23 and 2023-24 . The Fiscal Outlook
details the perceived economic weaknesses and forecasted revenue
changes that resulted in the anticipated state budget shortfall.
The 2024-25 Fiscal Outlook also includes the LAO’s assumptions
about the state’s economy for fiscal years 2024-25 through
2027-28 and how the state’s economy affects the state’s annual
revenues and expenditures.
Background
The LAO is the California Legislature’s nonpartisan fiscal and
policy advisor. The LAO’s annual Fiscal Outlook publication
provides an independent assessment of the California state budget
condition for the upcoming fiscal year. The publication also
includes a forecast of the state’s longer-term condition,
typically a three-year period following the upcoming fiscal year.
At the Government Finance and Administration policy committee
meeting during the CSAC annual meeting in November, we invited
the LAO to present their fiscal outlook for the 2024-25 budget.
Due to the IRS extension of the tax filing deadline for
California, and the resulting delay in key data used to develop
the fiscal outlook, the LAO postponed the release of the fiscal
outlook and presented on preliminary findings and analysis during
the policy committee meeting.
What’s next?
Looking ahead, Governor Newsom will announce his administration’s
proposed state budget for 2024-25 and the state’s updated revenue
forecast by January 10, 2024. CSAC will continue to monitor the
state’s economic condition and keep counties informed of economic
assessments that may aid in preserving fiscal sustainability in
the years ahead.
