(360 pages, 16MB) The 1990-91 Governor's Budget reflects two main constraints: first, the state's economy is expected to grow at a moderate pace, limiting the resources available to fund state spending requirements, and second, past state policy dictates the allocation of available resources. The administration’s budget offers as a starting point a set of policy choices that only partially accepts these dual constraints. While the budget recognizes the need to restrain state expenditure growth to the level of available resources, it proposes changes in existing policies as to how those resources are 'allocated. In part, this reflects the administration's preferences as to how the state's money should be spent. Over the next four months, the Legislature and the administration will attempt to reconcile their preferences in developing a state budget for 1990-91. However, changes in the economy and in the state's past policy choices also may influence the budget that is ultimately signed into law. Here we review the state's fiscal condition, the major areas where de-mand for state services is outstripping its ability to provide them, and the extent to which the state's existing revenue base is capable of supporting the delivery of existing and additional state services. Finally, we provide a brief examination of the strategies proposed in the Governor's Budget for resolving the state's fiscal dilemma.