State Fiscal Condition

Report #132, March 1995

OVERVIEW

This report examines the State’s fiscal condition and urges policy makers to make eliminating California’s structural deficit and improving the State’s credit ratings a top priority. While policy makers in the past have addressed tough budget choices with creativity, they have not been able to break the repeated cycles of short-term borrowing that have driven the State’s credit rating down and its overall costs up.

The Commission offers four recommendations for future action, which include crafting a budget that is based on reasonable and sustainable estimates of revenues, federal reimbursements and debt obligations; focusing on a realistic cash flow plan; cutting programs as deeply as necessary to end the 1995-96 fiscal year in a balanced position; and adopting long-term plans, budgets and policies that California’s budgets will be balanced in reality and not through financial maneuvers.