Tag: LAO

California Faces $68 Billon Dollar Deficit, while Californians with Developmental Disabilities and their Families Struggle

California’s budget deficit could hit a record $68 billion in the 2024-25 fiscal year, according to a report released last week from the non-partisan Legislative Analyst Office (LAO). The projected deficit is a result of a steep decline in tax revenue and comes after two years of record surpluses due to federal COVID-19 relief funding and large gains by California’s wealthiest.

As mentioned in the report, a major cause of the downturn is that the number of unemployed workers in California has risen nearly 200,000 since the summer of 2022. This has resulted in a jump in the state’s unemployment rate from 3.8 percent to 4.8 percent. This rise in unemployment has acutely impacted Californians with developmental disabilities and their families, who continue to struggle to find supports and services due to the lack of staff at service providers and regional centers. These state funded programs can only hire if the state provides adequate funding to do so, and an increase in reimbursement rates scheduled for July 2024 will help to employ more direct support staff – yet it will still require more rate increases to be truly competitive.

If the deficit projections are actualized, then the Legislature and Governor will have to use funds in the state’s rainy-day account, currently at $24 billion, and look at other options to balance the budget and jumpstart the economy. More employed Californians will be a key to turning around the state’s budget woes, and with investment into our developmental services system, service providers and regional centers will be ready to hire in a competitive employment market.

Legislative Analyst’s Office Releases California’s Fiscal Outlook for the 2023-24 State Budget – California Could Face a $25 Billion Deficit

By Teresa Anderson, Public Policy Director, The Arc/UCP California Collaboration

The Legislative Analyst’s Office (LAO) has provided fiscal and policy advice to the Legislature for 75 years. It is known for its fiscal and programmatic expertise and nonpartisan analyses of the state budget. Forecasting state revenues and expenditures is one of the many important functions of the LAO. Recently the LAO release the state budget forecast indicating that the state faces a $25 Billion dollar budget deficit, not adjusted for inflation, as well as ongoing deficits. Due to the fiscal uncertainty the LAO is recommending the Legislature identify recent budget augmentations that have not been distributed and consider pausing or delaying distribution. The report gives cause for concern in that the LAO points to provider rate adjustments and the effects of inflation stating, “In the Department of Developmental Services (DDS), although the Legislature recently enacted a plan to support rate models developed in a 2019 study (and updated to 2021-22 levels), under current law, providers would only receive rate adjustments based on future legislative decisions.”  The brief discusses the impact to state programs under both circumstances of whether the state automatically accounts for inflation or not and highlights the fact that there is significant variation in the mechanism used by the state to adjust for inflation such that some areas of the budget automatically adjust for inflation while others do not. The LAO Brief Considering Inflation’s Effects on State Programs can be read here: https://lao.ca.gov/reports/2022/4647/Inflation-Effects-on-State-Programs-111622.pdf

The full forecast can be read here: https://lao.ca.gov/reports/2022/4646/CA-Fiscal-Outlook-111622.pdf

 

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