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April 11, 2012 - Presented to San Francisco Planning and Urban Research Association
March 12, 2012 - Presented to Assembly Revenue and Taxation Committee, Hon. Henry T. Perea, Chair
November 16, 2011 - We forecast that General Fund revenues and transfers in 2011-12 will be $3.7 billion below the level assumed in the June budget package. Such a shortfall could result in $2 billion of “trigger cuts” to various programs—including all of the “Tier 1” trigger cuts and three-fourths of the “Tier 2” cuts. (The Director of Finance will determine the actual amount of such cuts next month.) In 2011-12, we project that the state will have a $3 billion deficit, including the effects of these trigger cuts. In 2012-13, the state will face higher costs due to expiration of a number of temporary budget measures, an increase in Proposition 98 school costs under current law, the repayment of its Proposition 1A property tax loan, and other factors. We project a $10 billion operating shortfall (the difference between annual revenues and expenditures) in 2012-13. The $3 billion “carry-in” deficit from 2011-12 and the projected $10 billion operating shortfall mean that the Legislature and the Governor will need to address a $13 billion budget problem between now and the time that the state adopts a 2012-13 budget plan.
April 14, 2011 - This letter is a statutorily-required analysis of the community development financial institution (CDFI) tax credit programs.
February 28, 2011 - Presented to Assembly Revenue and Taxation Committee
February 16, 2011 - Presented to Senate Governance and Finance Committee
February 7, 2011 - Presented to Assembly Budget Subcommittee No. 4 on State Administration and Revenue and Taxation
February 3, 2011 - Presented to the Senate Select Committee on Recovery, Reform, and Realignment. February 2, 2011.
January 31, 2011 - For four of its budget proposals, the administration uses a new approach for accruing (attributing) revenues to each fiscal year. In the administration's budget figures, this approach increases revenues available for the 2011-12 budget process by over $700 million and decreases the 2011-12 minimum funding guarantee for schools and community colleges by $1.5 billion below what it would have been otherwise. We find that the administration's new accrual approach—while imperfectly executed in its forecast—has some merit. It would move state budget accounting closer—in some respects—to generally accepted accounting principles. We fault the administration for not describing the new approach and its implications more clearly in its public budget documents and recommend that the Legislature take steps to require more transparency in the future.
January 6, 2011 - This responds to Senator de León's request for additional information on the single sales factor apportionment.
November 10, 2010 - Our forecast of California’s General Fund revenues and expenditures shows that the state must address a budget problem of $25.4 billion between now and the time the Legislature enacts a 2011‑12 state budget plan. The budget problem consists of a $6 billion projected deficit for 2010‑11 and a $19 billion gap between projected revenues and spending in 2011‑12. Similar to our forecast of one year ago, we project annual budget problems of about $20 billion each year through 2015‑16. We continue to recommend that the Legislature initiate a multiyear approach to solving California’s recurring structural budget deficit. In 2011‑12, such an approach might involve $10 billion of permanent revenue and expenditure actions and $15 billion of temporary budget solutions. In 2012‑13, 2013‑14, and 2014‑15, another few billion of permanent actions each year could be initiated, along with other temporary budget solutions, and so on until the structural deficit was eliminated.
September 29, 2010 - Presented to Joint Hearing of Senate and Assembly Committees on Revenue and Taxation
August 12, 2010 - At the August 11, 2010 informational hearing of the Senate Revenue and Taxation Committee we discussed our preliminary analysis of the conference committee tax swap proposal. This responds to Senator Wolk's request that we provide further information on our analysis.
June 16, 2010 - This responds to Assembly Member Logue's request that we provide an evaluation of the updated economic analysis prepared by the California Air Resources Board of its Scoping Plan for implementing AB 32 (Núñez).
May 26, 2010 - The February 2009 state budget agreement changed the apportionment formula used to determine California taxable income for firms that also operate in other states. While the current formula considers the location of firms’ sales, property, and payroll, starting in 2011 firms will have the option to consider only their sales. This policy is intended to encourage firms to produce in California and sell into other states. In this report, we examine the rationales for different approaches to apportionment and evidence from California and other states on how changes to apportionment laws affect both economic activity and tax revenue. Our findings indicate that: (1) a formula with a higher weight on sales and lower weights on property and payroll promotes job growth to some extent; (2) with most states’ formulas now based only on sales, the old formula that used property and payroll could put some California producers at a competitive disadvantage; and (3) allowing firms to choose their formula every year arbitrarily favors some firms over others. We recommend that the state require all firms to use the single sales factor, which would help the state’s competitiveness while limiting the cost to the budget.