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Monday, November 10, 2014

Update: The California Budget Surplus

by Calculated Risk on 11/10/2014 01:08:00 PM

In November 2012, I was interviewed by Joe Weisenthal at Business Insider. One of my comments during our discussion on state and local governments was:

I wouldn’t be surprised if we see all of a sudden a report come out, “Hey, we’ve got a balanced budget in California.”
At the time that was way out of the consensus view. And a couple of months later California announced a balanced budget, see The California Budget Surplus

The situation has improved significantly since then. Here is the most recent update from California State Controller John Chiang: Controller Releases October Cash Update
State Controller John Chiang today released his monthly report covering California's cash balance, receipts and disbursements in October 2014. Total revenues for the fourth month of Fiscal Year 2014-15 were $6.0 billion, coming in above Budget Act estimates by $662.2 million, or 12.3 percent.

For the fiscal year to date (July 1-October 31), total revenues reached $27.9 billion, beating estimates by $1.2 billion, or 4.5 percent.

Four months into the fiscal year, California's coffers overflow by $1.2 billion. The news comes on the heels of two other positive developments: the vote to strengthen California's rainy-day fund through Proposition 2, and the credit upgrade that followed one day later," Chiang said.
emphasis added
This is just one state, but I've been expecting local and state governments (in the aggregate) to add to both GDP and employment in 2014 - and that has happened.  I expect this trend to continue in 2015.