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California analyst forecasts one-time $26 billion windfall

Analysts say the economic consequences of the coronavirus pandemic have not been as severe as anticipated.

Credit: David Paul Morris

The California state Capitol building in downtown Sacramento, California.

SACRAMENTO, Calif. — California’s nonpartisan legislative analyst says the state is expected to have a surprise one-time $26 billion windfall in the next budget year.

The analyst says the economic consequences of the coronavirus pandemic have not been as severe as anticipated. But he warned Wednesday that the eye-popping windfall is solely the result of the state overestimating what was expected to be a $54 billion budget deficit in the current spending plan. He says the state’s spending commitments will still outweigh its projected revenue going forward.

That will result in a small operating deficit in the next budget that will grow to $17 billion by 2025.

Under our main forecast, the state would have a windfall of $26 billion in 2021-22. However, the fiscal situation also faces an unprecedented amount of uncertainty. Revenues are likely to be higher or lower than our main forecast by billions of dollars. (1/5) pic.twitter.com/7FjuBSpTD6
— Legislative Analyst (@LAO_CA) November 18, 2020

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