The Legislative Analyst’s Office (LAO) released a report last week entitled “The Fiscal Outlook Under the February Budget Package.” The report concludes that the weakening economy has already eclipsed the revenue assumptions on which the February budget package was based. Specifically, the LAO projects that state General Fund revenues for 2009-10 will be $8 billion less than the $97.7 billion estimate used for the February enacted budget. The LAO opines that a portion of this new “gap” can be filled using funds from the recently enacted federal stimulus bill, but concludes that “the Legislature’s work on the 2009-10 budget is not yet done.”

Additionally, the Legislative Analyst and a representative from the Department of Finance testified before the Assembly Budget Committee on the federal stimulus legislation (the American Recovery and Reinvestment Act or ARRA) and its possible affect on the California budget.

This report was followed up by representatives of the Department of Finance, the Treasurer’s Office and the Controller’s Office also testified before the Assembly Budget Committee on the state’s cash and bond management situation. The central message was that, notwithstanding the enactment of a state budget plan for 2009-10, the state still faces daunting challenges in engaging in both the short-term and longer-term (bond) borrowing that it needs over the next several months.

For a full copy of either above referenced reports we have provided you the links below:

“The Fiscal Outlook Under the February Budget Package”

“Federal Economic Stimulus Package: Fiscal Effect on California”