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Analysis of the 2008-09 Budget Bill

Analysis of the 2008-09 Budget Bill. Legislative Analyst’s Office February 2008. www.lao.ca.gov. Key LAO Findings. Lower Revenues Larger Budget Problem Structural Shortfall After 2008-09 Failure to Set Priorities. 1. Taxable Sales Growth to Trail Personal Income.

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Analysis of the 2008-09 Budget Bill

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  1. Analysis of the 2008-09 Budget Bill Legislative Analyst’s Office February 2008 www.lao.ca.gov

  2. Key LAO Findings • Lower Revenues • Larger Budget Problem • Structural Shortfall After 2008-09 • Failure to Set Priorities 1

  3. Taxable Sales Growth to Trail Personal Income Annual Percentage Change 2

  4. Weakness in CaliforniaCorporate Profits Expected Annual Percentage Change 3

  5. Operating Shortfalls Return After 2008-09 Under Governor’s Budget General Fund (In Billions) 4

  6. LAO Alternative • Targeted Approach to Spending • Balanced Approach Includes Revenues • Balanced Budget Through 2012-13 5

  7. Targeted Program Reductions • Core Services at Current Levels • Eliminate/Modify Ineffective Programs • Use Other Funding Sources for Services • Local Administrative Flexibility 6

  8. Better Proposition 98 Approach 7

  9. Add Revenues in a Reasonable Manner • Reduce Dependent Credit • Limit R&D Credit • Limit NOL Carryforwards • No Broad-Based Tax Rate Increases 8

  10. LAO Alternative:Other Key Elements • Rethink State Responsibilities • No Additional Borrowing or Debt 9

  11. Budgetary Reform Alternative • Build Upon Proposition 58 Reserve Framework • Rethink State’s Budgetary Formulas 10

  12. LAO Alternative:A Starting Point • Tough Decisions Ahead • Legislative Priorities Will Set Framework 11

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