Budget preview

Friends-

As I wrote earlier today, the governor's budget is being released at 10am on Thursday.

In advance, here's the information we have for Prop 98:

2014-15: +$1,298B (~$142 million for community colleges)  ("settle-up")

2015-16: +$739 million (~$81 million for community colleges) ("settle-up")

2016-17: estimated $3.6 billion increase (around $393 million for community colleges)

(All numbers from the nonpartisan Legislative Analyst's Office.)

Next year is expected to be a "Test 3" year under Proposition 98, meaning that the minimum K-14 funding guarantee will be operative based on the per capita growth of General Fund revenues and K-12 ADA. K-12 ADA is on the decline, so there's a bit of an offset. Nevertheless, General Fund revenues are robust and the balance of finance is being significantly helped by the growth of property tax revenues, which relieves resources from the General Fund in robust Proposition 98 years. 

That reduces the political fight between K-14 schools and health and human services, state employees, and UC/CSU.

Obviously, the question is how Governor Jerry Brown treats the revenue situation. With Prop. 98, he prefers to lowball it and than "settle up" at the end of the year. It's a smart way to play the game. If you over-appropriate, you're stuck with that compounding obligation in future years.

It will be interesting. The budget has been put to bed, but there aren't many leaks. We just may have to wait until Thursday, but of course that's only the opening salvo. And, we have new leaders in both the Assembly (Anthony Rendon) and Senate (Kevin de Leon), so it'll be a fascinating year. 

Scott