California legislative analyst issues ‘promising’ report on budget

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California’s financial situation has improved dramatically, but the state could still finish the fiscal year with a deficit, according to a new report from the nonpartisan legislative analyst’s office.

The report estimated that state officials will need to bridge a $1.9-billion budget gap when hammering out its next spending plan next summer. That’s far less than the $16-billion gap the state faced during budget negotiations this year.

Over the next few years, the state may begin producing multibillion-dollar surpluses, according to the report released Wednesday afternoon.

The report said California is at ‘a promising moment: the possible end of a decade of acute state budget challenges.’

Voters helped boost the state budget by passing Gov. Jerry Brown’s tax-hike plan, Proposition 30. But some of the administration’s other estimates aren’t expected to pan out, the report said.

In particular, the state may save less than half of the administration’s original forecast of $3.1-billion from the dissolution of redevelopment agencies.

Also, the tax windfall from Facebook’s debut on Wall Street may be a third less than the $1.9 billion state officials were counting on.

Those shortfalls mean the state could end up burning through its nearly $1-billion reserve and finish the year with a $1-billion deficit, the report said.

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-- Chris Megerian in Sacramento
twitter.com/chrismegerian