Budget Analyst To California Lawmakers: Build A Stronger Reserve

California’s non-partisan Legislative Analyst is recommending that state lawmakers budget carefully this year in preparation for the next recession – even as tax revenues continue to exceed expectations.

The LAO warns the state may very well be reaching the peak of this long economic expansion. So it's encouraging the Legislature to set a major target for reserves – although it suggests that if the Legislature does not want to put the money into the Proposition 2 rainy day fund created by voters, which is largely controlled by the governor, it could instead put the money into a different state budget reserve controlled to a greater degree by the Legislature.

The analyst’s report released Monday says even after building a larger budget reserve, there would likely be money available for new ongoing spending commitments. That’s a top priority of the Legislature’s majority Democrats.

Meanwhile, the state controller’s office said Monday that California budget revenues are now nearly $400 million ahead of projections from the state’s current spending plan passed last June.