California's Fiscal Outlook for 2019-2020 Budget: Key Insights and Projections

In this report, California's Legislative Analyst's Office presents a detailed analysis of the state's fiscal outlook for the 2019-2020 budget. It covers near-term and longer-term projections, key economic variables, revenue outlook, general fund condition, and potential scenarios under different economic conditions. The report highlights the state's positive budget condition but also warns of future challenges and the need for preparedness. Demographic changes and expected growth trends are discussed, emphasizing potential impacts on general fund spending growth.

• California
• Fiscal Outlook
• Budget
• Economic Projections
• Revenue
• General Fund
• Demographics

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1. The 2019-20 Budget: California s Fiscal Outlook Presented to: California State Association of Counties November 29, 2018 Legislative Analyst s Office

2. Near-Term Outlook 1

3. Projections of Key Economic Variables 2

4. LAO Revenue Outlook The Budget Is in Remarkably Good Shape 3

5. LAO General Fund Condition The Budget Is in Remarkably Good Shape 4

6. Longer-Term Outlook 5

7. Spending in Growth Scenario Schools, Community Colleges, and Medi-Cal Drive $19 Billion in Projected Spending 6

8. General Fund Surpluses and Deficits Under Different Scenarios Long-Term Outlook Is Positive 7

9. General Fund Surpluses Under Economic Growth Scenario General Fund Operating Surpluses Decline With New Commitments 8

10. General Fund Condition Under Recession Scenario With More Commitments, Reserves Might Not Fully Cover the Budget Problem 9

11. LAO Comments The State s Budget Condition Can Change Quickly Legislatures Has Unique Opportunity to Prepare for Coming Challenges 10

12. Demographic Changes 11

13. Expected Growth by Age Cohort, 2017-2023 On Net, Demographic Trends Likely Resulting In Lower General Fund Spending Growth 12

14. lao.ca.gov 13