SACRAMENTO (AP) — California's nonpartisan legislative analyst said Friday the state's budget deficit could be higher than Gov. Jerry Brown estimated earlier this week but also found the administration's economic and revenue forecasts were reasonable.
The report said the anticipated $15.7 billion budget deficit could grow by more than $1 billion if the governor's revenue projections from defunct community redevelopment agencies and other sources were too optimistic.
Legislative analyst Mac Taylor said the state finance department may be overstating by more than $900 million how much property tax revenue and assets the state could collect after its elimination of the redevelopment agencies, a move approved last year as part of Brown's effort to send more money to schools, law enforcement and other local services.
Yet the analyst's office also said tax revenue in the fiscal year that starts July 1 is likely to remain volatile and could be several billion dollars lower or higher than projected because of numerous tax and economic factors. The uncertainty creates challenges for accurate budget forecasts, the report said.
Among the uncertainties in play is what the Legislature will do with Brown's proposed budget.
Democratic lawmakers, who control the Assembly and Senate, have said they will try to reduce some of the proposed spending cuts and could even cancel Brown's effort to include a $1 billion reserve fund.
Taylor said California could tap such a reserve fund if revenue comes in below expectations.
"The reserve is for when it's raining, and it's pouring out there," he said.
Brown's budget proposal also relies on voters approving $8.5 billion in temporary tax increases next November. Tax revenue from sales of Facebook stock could generate another $2.1 billion.
There could be an extra motivation for Facebook shareholders to sell this year, before a possible January increase to the federal income tax rate and a possible tax on high-income earners that is part of the Democratic governor's ballot initiative.
