Legislative Analyst Cautions Lawmakers About the State’s Economy and Revenue Collections

The conclusion of the anaylst’s Economic and Revenue Update released February 27:

“Economic data currently is providing plenty of mixed signals to California’s policymakers, as they continue to craft state and local budgets in a constrained fiscal environment. California’s economy now is clearly improving in many important ways, including employment growth. Nevertheless, significant impediments block the state’s path to a more robust recovery from the recent, staggering economic downturn.

“Like the economic data, reports concerning state revenues also have been delivering some mixed messages recently, with recent weakness in income tax payments accompanied by speculation concerning a future bonanza of tax revenues due to the possible Facebook IPO.

“If our revenue forecast proves to be more accurate than the administration’s, the Legislature and the Governor will have to identify additional budgetary solutions to bring the 2012–13 state spending plan into balance. Much more information will become available by the end of April, when a large amount of income tax payments are received by the state and refund payments are made. The Legislature will want to wait until after this data is analyzed in the May Revision process before making its 2012–13 budget decisions.”

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