The California’s Legislative Analyst Office (LAO) just released a report on the outlook for the 2023-24 fiscal year.
The 20-page report shivers one’s timbers concluding that “revenue estimates represent the weakest performance the state has experienced since the Great Recession.”
The LAO’s report explains the bleak forecast succinctly:
“Facing rising inflation, the Federal Reserve—tasked with maintaining stable price growth—repeatedly has enacted large interest rate increases throughout 2022 with the aim of cooling the economy and, in turn, slowing inflation. The longer inflation persists and the higher the Federal Reserve increases interest rates in response, the greater the risk to the economy. The chances that the Federal Reserve can tame inflation without inducing a recession are narrow. Reflecting the threat of a recession, our revenue estimates represent the weakest performance the state has experienced since the Great Recession … we anticipate the state will have a $25 billion budget problem to solve in the upcoming fiscal year. A ‘budget problem’—also called a deficit—occurs when resources for the upcoming fiscal year are insufficient to cover the costs of currently authorized services. The budget problem is mainly attributable to lower revenue estimates, which are lower than budget act projections from 2021-22 through 2023-24 by $41 billion.”
Several of the key takeaways from the LAO’s analysis include recommendations that the Legislature not tap into the rainy day fund yet with a looming recession, and call for a pause, delay, or reassessment in the funding of expanded programs to see if they are working as expected.
Two thoughts come immediately to mind — at least my mind anyway.
1. The LAO’s literally “depressing” fiscal outlook is bad news for Gavin Newsom’s anticipated 2024 presidential run. If California’s economy tanks, Newsom’s White House aspirations most likely follow suit. And that’s assuming he can beat Biden in the primaries (yes Biden will seek a second term).
2. A Great Recession-like economic landscape is equally bad news for local governments spread throughout California’s 58 counties.
You don’t need me to explain why that’s the case. All you have to do is look at Mendocino County’s ongoing fiscal distress, self-inflicted or otherwise.
By the way, I believe that County Executive Officer Darcie Antle is doing a good job under very trying circumstances, as she inherited several big messes left by her predecessor.
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PS. I received quite a few comments on last week’s column about the BOS tentatively approved proposed Commercial Well Extraction Ordinance that’s been stuck in the County Counsel’s Office ever since July 12th. According to County Counsel Christian Curtis, “At this point, I don’t know if there’s anything that can be done to move it along. It is something that is going to require additional analysis before we go to the Planning Commission.”
We ran some responses last week. Here are some more of what some people think about this fiasco.
“Thank you very much for your follow up and for communicating the disappointing County administrative delays. I have been wondering about progress and assuming the same old understaffing reasons for inaction by our esteemed representatives and county administrators. If you had not paid attention I fear the whole thing might have gotten lost in the paper shuffle. Only persistence pays off, due diligence is just the first step. Looking forward to more.”—Anonymous
“They all sit in these high-powered jobs earning tons of money but the positions are not based on brain power or functionality.” —Anonymous
(Jim Shields is the Mendocino County Observer’s editor and publisher, observer@pacific.net, the long-time district manager of the Laytonville County Water District, and is also chairman of the Laytonville Area Municipal Advisory Council. Listen to his radio program “This and That” every Saturday at noon on KPFN 105.1 FM, also streamed live: http://www.kpfn.org.)
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