California’s nonpartisan legislative analyst is forecasting that the state will have a one-time $26 billion windfall in its next budget year, saying that the economic consequences of the coronavirus pandemic have not been as severe as anticipated.
But analyst Gabriel Petek warned Wednesday that the eye-popping windfall is solely the result of the state overestimating the $54 billion budget deficit in the current spending plan. Going forward, the state’s ongoing expenses will still outweigh its spending commitments, resulting in a small operating deficit in the 2021-22 budget that will grow to $17 billion by 2025.
“While negative economic consequences of the pandemic have been severe, they do not appear to have been as catastrophic from a fiscal standpoint as the budget anticipated,” Petek’s report said. “But, the recovery has been uneven. Many low‑income Californians remain out of work, while most high‑income workers have been spared.”
Check back for updates on this developing story.