May Revision multiyear forecast released
Shows much less rainy day fund usage in 2024-25, with less deficit pressure for reserve usage thereafter
The administration’s required multiyear General Fund budget forecast, updated with the Governor’s May Revision proposals and updated revenue estimates, has been posted here.
The multiyear forecast shows the Governor’s much lower proposed usage of reserves in 2024-25, as compared to his January proposal. In January, the administration’s multiyear forecast showed that the state’s main rainy-day fund, the Budget Stabilization Account (BSA) would have a projected balance of $11.1 billion at the end of 2024-25, reflecting $12.2 billion of proposed withdrawals and suspended transfers to the BSA. By contrast, the May Revision multiyear forecast shows the BSA with a projected balance of $19.4 billion at the end of 2024-25, reflecting the use of just $3.3 billion of BSA funds. (Proposition 2 rules mean that changes in revenue estimates result in other, smaller changes to prior deposits to the BSA.)
The multiyear forecast uses $8.9 billion of BSA funds, along with cuts, delays, and other budget changes, to help balance the 2025-26 budget—which was more than $30 billion out of balance in the January budget plan. This leaves the BSA with $10.5 billion at the end of 2025-26, with total reserves then of $11.2 billion. In the January budget plan, there were no net reserves at all at the end of 2025-26: in fact, a net negative balance of total reserves was shown of -$15.9 billion. Accordingly, the May Revision improves the projected total reserves in 2025-26 by more than $27 billion (the difference between +$11.2 billion and -$15.9 billion).
The May Revision multiyear forecast shows required withdrawals from the Proposition 98 rainy day fund, the Public School System Stabilization Account, which uses all of that account’s balance by the end of 2024-25. Both the January budget proposal and the May Revision suggest using the entire $900 million balance of the Safety Net Reserve Fund in 2024-25.
Annual deficits in 2026-27 and 2027-28 totaled about $30 billion per year in the January budget plan. In the May Revision, they are $11 billion to $14 billion per year. The May Revision estimates assume suspended deposits to the BSA through 2027-28 (about $2 billion per year), unlike the January estimates. Revenues and transfers are about $9 billion to $12 billion higher per year in these years in the May Revision forecast, which helps the bottom line, but also increases Proposition 98 requirements in at least some years.
Links to information about the May Revision are here.