Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Michael P. Callagy, County Executive
Connie Juarez-Diroll, Chief Legislative Officer
Subject: State and Federal Legislative Update #1-Analysis of the Governor's Fiscal Year (FY) 2024-25 State Budget Proposal and 2024 State and Federal Legislative Sessions
RECOMMENDATION:
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Recommendation to:
A) Accept this analysis of the Governor's FY 2024-25 State Budget Proposal; and
B) Accept an informational report on the 2024 State and Federal Legislative sessions.
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BACKGROUND:
On January 10, 2024, Governor Newsom released his initial budget proposal for the 2024-25 fiscal year, a $291.5 billion ($208 billion General Fund (GF)) spending plan. The Governor's Budget forecasts that GF revenues will be $44 billion lower compared to the FY 2023-2024 budget, and California will be facing an estimated budget gap of $37.86 billion in the 2024-25 fiscal year, differing significantly from the Legislative Analyst's Office (LAO)'s projected $68 billion budget deficit announced in December. The Administration notes that the shortfall is due to two main factors: 1) a significant decline in the stock market in 2022 that impacted revenues, and 2) the substantial delay in receiving critical income tax collections when stock market trends impacted high earners. To close the budget gap, Governor Newsom proposes a combination of borrowing from budgetary reserves, funding delays, reductions to internal special funds, budget shifts, deferrals, and limited revenue generation.
The proposal is optimistic about 2024 fiscal conditions and projects that California's economy will grow in 2024 based on recent stock market gains and as markets anticipate interest rate cuts. While the Governor's budget proposal is cautiously optimistic, there are significant risks to the forecast, including rebounding of inflation levels, sustained high-interest rates, and global eco...
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