California's Fiscal Outlook and Economic Trends in 2015

California's fiscal outlook in 2015 highlighted positive economic indicators such as growth in personal income, a decline in unemployment rates, and strong job growth in the Bay Area. The state's economy was on an expansion trajectory, with assessed property values growing moderately and housing permits increasing throughout the forecast period. State revenues showed an upward trend in the General Fund and Education Protection Account for 2014-15 and 2015-16.

• California
• Fiscal Outlook
• Economic Trends
• 2015
• State Revenues

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1. Californias Fiscal Outlook Presented to: California Association of School Business Officials, CBO Symposium November 19, 2015 Legislative Analyst s Office 0

2. National and State Economic Outlook 1

3. U.S. Economy Expands Throughout Forecast Period Real Gross Domestic Product, Percent Change From Prior Year 2

4. Current Economic Expansion Already Among Longest in U.S. History Data Since 1854 3

5. Growth in Personal Income StrongThroughout Forecast Period Percent Change From Prior Year 4

6. Unemployment Rate Drops Throughout Most of Forecast Period Percent Change From Prior Year 5

7. Bay Area Job Growth Has Outpaced Rest of State Percent Job Growth From Prior Year, As of September 2015 6

8. Bay Area Home Prices Have Outpaced the Rest of the State Median Home Price 7

9. California Housing Permits Increase Throughout Forecast Period Permits, In Thousands 8

10. Assessed Property Values Grow Moderately Throughout Forecast Period Percent Change From Prior Year 9

11. States Fiscal Outlook 10

12. State Revenues Up in 2014-15 and 2015-16 General Fund and Education Protection Account Combined (In Millions) 11

13. States General Fund Condition Healthy in 2016-17 Estimates Under Main Scenario (In Millions) 12

14. All Big State Revenue Sources Grow Throughout Forecast Period Big Three Revenues Under Main Scenario (In Billions) 13

15. Annual Rainy Day Deposits Become Smaller Each Year of Forecast Period Estimates Under Main Scenario (Dollars in Billions) 14

16. Main Scenario: Operating Surpluses (In Billions) 15

17. Debt-Service Ratio Expected to Remain Around 5 Percent Percent of General Fund Revenues and Transfers Spent on Debt Service 16

18. Education Outlook 17

19. 2014-15 Minimum Guarantee Up From Budget Act Estimates (Dollars in Millions) 18

20. 2015-16 Minimum Guarantee Up From Budget Act Estimates (Dollars in Millions) 19

21. $3.6 Billion Increase in Proposition 98 Funding Projected for 2016-17 LAO Main Scenario (In Millions) 20

22. Minimum Guarantee Almost $10 Billion Higher in 2019-20 Than 2014-15 LAO Main Scenario (In Billions) 21

23. Increases in Guarantee Borne Disproportionately by Local Property Tax Change From Prior Year (In Billions) 22

24. Local Control Funding Grows More Quickly During First Half of Forecast Period Percent of Target Funded 23

25. Effect of State Revenues on Minimum Guarantee Changes Throughout Period 2014-15: Highly Sensitive 2015-16: Highly Insensitive 2016-17: Somewhat Sensitive Remainder of Period: Somewhat Sensitive 24

26. Other Outlook Scenarios 25

27. Slowdown Scenario: Smaller Operating Surpluses (In Billions) 26

28. Recession Scenario: Reserves Cover Operating Deficits Until 2019-20 (In Billions) 27

29. Comparing Proposition 98 Minimum Guarantee Under Three Scenarios (In Billions) 28

30. lao.ca.gov 29