State Budget Adds To Record Reserves

This month marks the longest period of economic expansion in U.S. history. For 121 months and counting, the national and state economies have experienced continuous growth. That’s good news for the state’s treasury. As a result, the new state budget contains record-breaking levels of spending…and dollars not spent. The budget that the legislature passed and governor just signed includes total budget reserves of more than $20 Billion—also a record for the state. The continued accumulation of budget reserves represents progress toward preparing for an economic slowdown. Because of California’s tax structure, recessions hit the budget particularly hard. Past recessions have caused deep drops in the level of general fund dollars available, leading to a combination of spending cuts, tax increases, and borrowing to balance the budget.


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