LA Times: Analyst predicts $2.5-billion windfall for California

Forecast: Rising stock market and property values will bring California higher tax revenue
California’s extra tax revenue would go to a $1.2-billion increase in Medi-Cal costs, governor says
California Gov. Jerry Brown: ‘Economists never predict a recession’

California’s income will be about $2.5 billion higher than Gov. Jerry Brown predicted in his latest budget, according to the Legislature’s top financial advisor — surprise cash that Democratic lawmakers will almost certainly use to challenge the governor’s call for continued austerity.

The healthier stock market and increasing property values will bring in the higher tax revenue, nonpartisan Legislative Analyst Mac Taylor said in his own projection Friday.

The dueling forecasts could heighten an election-year tussle between a governor preaching fiscal caution and legislative leaders bent on returning more funds to social programs, mental health care and other services decimated by budget cuts during the recession. The Legislature is required to pass a budget by June 15.

In his report, Taylor cautioned that most of the increase would be directed to schools under the state’s education funding law. That would leave “no more than several hundred million dollars” to pay for other programs, pay down debt or set aside in an emergency fund.

Still, the projections were welcomed by Democrats, including Sen. Mark Leno of San Francisco, chairman of the Senate Budget Committee.

“It looks very positive,” Leno said of Taylor’s report. “It certainly adds to our conversation with the governor.”

Brown also called for allocating money to address one of the state’s most vexing financial problems, the long-term $73.7-billion shortfall in the teachers pension fund. Brown wants the state to increase deposits into that fund and raise teacher contributions. But the bulk of the money would come from school districts.

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