In a recent interview with the SF Chronicle, civil rights champion Rev. Amos Brown had this to say about San Francisco:

A week later the Chronicle reported that former PTA president Naomi Laguana moved her son out of SF schools because, as her husband put it: ”The district’s stated goal is to ‘foster highly engaged and joyful learners and support every student reaching his or her potential,’ but that’s not happening.”

California is ground zero for political hypocrisy. It’s not just a K-12 system that holds kids hostage, but also an unemployment insurance department that keeps desperate people waiting weeks…

Dear State Legislators,

Don’t do it. Don’t sign off on the new contract Governor Newsom has negotiated with Unit 6. It’s another giveaway to a powerful special interest — Corrections employees — that already collects gobs of money that could be used elsewhere. 55,000 employees already collecting more than $5 billion per year in salary and costing billions more in unfunded retirement costs for attending to just 100,000 inmates is bad enough.

To be clear, we are not anti-spending, just anti-unnecessary-spending-in-favor-of-special-interests. We are very pleased to see Medi-Cal extended to more residents and child care expanded (assuming that, like Medicare…

In case you hadn’t noticed, we gave readers a lengthy respite from our missives while the Legislature and Governor negotiated the budget for the fiscal year starting July 1. Through June 10 we had supplied legislators and reporters with several notes describing the need to dramatically boost budget reserves.

27 Democratic legislators got it, as did the Economist. The math isn’t complicated — indeed, the Governor’s own budget discloses it. But we lost the battle. According to press reports, the budget to be signed next week will leave reserves at less than one-quarter of those needed and permit schools to…

If we are reading the laws about school reserves correctly, California’s K-12 schools are being set up for a fall of epic proportions unless schools or the state save much more from surging revenues.

Under conditions likely to be met this year, non-basic aid school districts with more than 2,500 Average Daily Attendance must cap reserves at only 10 percent of expenditures, but 10 percent is just one-sixth of the drop in state revenues — the principal source of school revenues — that DOF forecasts will occur over three years from a stock market decline no greater than the declines…

The CA Legislature must pass a budget by June 15. Based upon the Legislature’s Version of the State Budget submitted by Budget Committee chairs, as of now it is on track to make a big mistake.

This is a chart of the S&P 500 Index from January 1 1991 through June 4:

CA General Fund Revenues rise and fall with stock markets, and not only because of capital gains but also stock grants, restricted stock units and other stock-related compensation reported on W-2 statements. …

The first sentence of Multi-Year Budget Outlook published recently by California’s Legislative Analyst’s Office comes with an important disclaimer [emphasis added]:

This report presents our office’s independent assessment of the condition of the state General Fund budget through 2024‑25 assuming the economy continues to grow.

With that assumption in mind, LAO counsels legislators to add $12 billion to reserves:

To protect against future recessions, we recommend the Legislature restore the $12 billion in outstanding budget tools used in last year’s budget package.

But $12 billion is not nearly enough for a state like California that’s uniquely dependent upon stock markets…

Dear Legislators,

With your deliberations over the 2021–22 Budget, you are about to make a most consequential decision. Below is a chart of General Fund Revenues and Transfers from the beginning of the last decade. The blue columns are closed fiscal years. The green column is for the current fiscal year, which closes June 30. The yellow column is the amount projected by the Department of Finance for the next fiscal year, which starts July 1.

Until the current fiscal year, R&T rose at an annual rate of 5.9 percent, itself a high rate on which to project revenue growth…

The 2020 CA Budget Act enacted just 11 months ago forecast the S&P 500 to be at 2,060 in the first quarter of 2021. But because the S&P 500 closed the quarter at nearly twice that level and CA tax revenues are correlated with stock markets, revenues are way ahead of forecast. When it comes to revenue projections, no state flies more blindly than California.

That’s why a debate between LAO and DOF over whether there might be a $38 billion or $76 billion surplus is meaningless. Though technically LAO is correct that a portion of dollars received into the…

24 months ago, California’s Department of Finance forecast $151.8 billion of revenues in 2022–23 from the three largest sources:

Just 12 months later, DOF revised that forecast down $30 billion:

We have reviewed the May Revision to the Governor’s Proposed Budget for the 2021–22 fiscal year, which starts July 1. Our views are summarized below:

Unreliable Revenue Projections. Just seven months after the May Revision a year ago, the Department of Finance revised its projections for General Fund revenues for the current (2020–21) fiscal year up 23 percent, and five months after that, another 16 percent. Don’t blame DOF — that’s just the nature of CA’s tax revenues, which are linked to inherently unpredictable investment markets. No one can project CA’s tax revenues with any reliability. That’s why sufficient Reserves…

David Crane

Lecturer at Stanford University and president of Govern For California

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store