Significantly improved General Fund revenue trends since January and over $13 billion of budget actions already approved by the Legislature have reduced the size of the budget gap still to be addressed by California’s elected leaders. The administration identifies a $9.6 billion remaining budget problem based on generally reasonable 2010-11 and 2011-12 revenue and expenditure assumptions. The Governor’s plan to address this shortfall and leave the state with a $1.2 billion reserve at the end of 2011-12 has many positive aspects. It would help bring annual spending and resources much closer in line for the next five years, and its focus on reducing budgetary debt obligations is laudable. On the other hand, the Legislature has other options to address the reduced budget shortfall, including adoption of alternative tax proposals, additional program reductions, and selected fund transfers and internal borrowing. The improved economic and revenue situation, along with significant budgetary solutions already adopted, mean that California now is in a position to dramatically shrink its budget problem with a focus on ongoing budget solutions.