Analyst: California budget 'in remarkably good shape'

SACRAMENTO — California's budget is in "remarkably good shape" as fiscally conservative Gov. Jerry Brown prepares to hand off to governor-elect and fellow Democrat Gavin Newsom, the state's legislative analyst said Wednesday.

Newsom and the Legislature will have nearly $15 billion to allocate next year, the analyst said, but it warns that the state might face budget cuts during any future recession if lawmakers don't commit that entire surplus to California's rainy day funds.

"It is difficult to overstate how good the budget's condition is today," said Mac Taylor, an appointee of the Legislature who wrote the analysis. "By historical standards, this surplus is extraordinary."

The analyst's longerterm outlook also is rosy, projecting annual surpluses averaging more than $4 billion annually if the economy continues to grow.

Lawmakers need to be prudent but still spend some of the money in areas that will improve people's lives, said Assemblyman Phil Ting, D-san Francisco, the Assembly's budget chairman.

"I think when people see we have all this revenue, their first reaction is we want to spend it all," Ting said. "Our fiscal situation is very strong in California, but we also have a recession looming — we just don't know when it's coming."

Brown has warned of an inevitable economic downturn for years as he blocked legislative spending. Newsom has said he also will be fiscally cautious, but has advocated expensive programs including providing universal health care, preschool for every child, creating jobs and stemming homelessness.

Newsom did not immediately comment on the forecast, which comes as his transition team begins crafting the budget he will recommend to lawmakers in January.

Democratic Senate President Pro Tem Toni Atkins of San Diego said that Brown and lawmakers "have pulled the state from the depths of the Great Recession" while building reserves and increasing spending in critical areas while Brown has been governor.

She promised a responsible budget "while also making strong new investments in our schools, universities, infrastructure, environmental-protection efforts and poverty reduction programs."