Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: John L. Maltbie, County Manager
Subject: Analysis of the FY 2018-19 May Revision
RECOMMENDATION:
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Accept this analysis of the FY 2018-19 May Revision.
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BACKGROUND:
On May 11, Governor Jerry Brown released the May Revision to his proposed 2018-19 state budget, which provides a total budget of $199 billion. The Governor forecasts revenues $8.0 billion higher-over a three-year period-than projected in January, mostly reflecting higher tax collections due to strong economic growth and stock market gains. In fact, growth projections for the big three State General Fund sources, personal income taxes, sales and use taxes, and corporation taxes, are all higher.
Despite this significant increase, the Governor continues to caution that these revenues are largely one-time and commitments for spending should not be done on a permanent basis. Thus, the Governor is proposing to use the additional revenues to build up reserves, pay down budgetary debts, and make one-time investments in infrastructure. The May Revision provides $6.1 billion for reserves and paying down debt-$3.5 billion as constitutionally required by Proposition 2 (2014), with half deposited in the Rainy Day Fund and half used to pay down debts-and an additional discretionary $2.6 billion deposit to the Rainy Day Fund. The Administration also proposes to deposit $3.2 billion into the Special Fund for Economic Uncertainties, which is the State's short-term reserve fund. This fund's purpose is to pay for unforeseen circumstances that arise during the fiscal year, such as higher than-anticipated costs for disaster response. With these deposits, State reserves should total $17.0 billion by the end of 2018-19-bringing it to 100 percent of the constitutional target. The May Revision also emphasizes impending risks to the State's economy, such as a stock market correction,...
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