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California Budget May Revision: An Insider's Guide

Every spring, as it starts to heat up in Sacramento, we find ourselves on the brink of another significant moment - the release of the Governor's May Revision. The Governor announced today that he will release the revised budget on Friday, May 10th at 11am which you can livestream on either the @CAgovernor Twitter page, California Governor Facebook page, and the Governor’s YouTube page. For many, this is more than just a budget proposal update; it influences the direction of countless lives and businesses. At Full Moon Strategies and Keely MB Strategies, we understand the intricacies of the California State Budget - its impacts, its nuances, and its challenges.

Even for those adept in the political spheres of California, the State Budget process can seem as complex and layered as understanding the people and places of our state. Given California's ranking as the fifth largest economy in the world, the stakes of the State Budget touch not just local communities but have ripple effects globally. 

Tiny construction workers build the California State Capitol Building out of U.S. dollars

It is important to understand some budget fundamentals that dictate the budget architecture,  including constitutional mandates like Propositions 2 and 98. Medi-Cal caseload also drives significant spending and in turn, lessens available discretionary spending. It's imperative to grasp these foundational stones before attempting to understand the challenges and opportunities presented by the revised budget.

And you must not overlook the importance of the multiyear outlook. Decisions today can have a profound impact on the budget for years to come since deferrals and delays are often on the table.  To understand the probability of those expenditures actually occuring—you need to look at the budget outyears.  The Governor’s Budget showed a projected $30 billion deficit in the next fiscal year, 2025-26.  

This year more than others federal funds are a big part of the budget landscape, particularly in light of the resources coming from the Infrastructure Investment & Jobs Act and the Inflation Reduction Act. The decision-making around and availability of these funds is a generational opportunity.

Of note too is the question of how to strategically utilize the state’s general obligation bond authority. Policymakers could decide to shift capital expenditures off the budget and onto GO bond financing.  However, this requires voter approval and how much debt voters will approve remains to be seen.

These points are merely the beginning of a conversation we’re deeply passionate about – a conversation about strategy, advice, and the importance of the budget in all policy discussions.

For detailed, tailored advice that anticipates the shifts and navigates the intricacies of California’s budgetary landscape, reach out to us. Together, we can chart a course through the fiscal year with insight and intention.

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