If you want a vivid illustration (from an adjacent state) about the impact of pessimistic fiscal projections: Oregon has an infamous "kicker" law that refunds income taxes collected in excess of projections (plus a 2% margin). The state faces the same budgetary challenges as California... but can't project too pessimistically lest it leave money off the table.

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jaggederest 5 hours ago | parent [-]

Oregon's kicker law is a textbook example of bad economic policy, sadly. It essentially means that in boom years the state can't accumulate any general funds for recessions, which is half of the point of a state-level political entity in the first place. Balanced budgets and pay as you go are fabulous over the medium term, but over the short term of a year or two during a disaster or recession, governmental spending is critical as a counterbalance to reduced investment and general employment income.

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jerlam 5 hours ago | parent | next [-]

California is also required to refund taxpayers if it accumulates too much revenue. The state's spending is capped at some limit set in 1979 with adjustments for inflation and population.

https://calbudgetcenter.org/resources/qa-why-hitting-gann-li...

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tantalor 5 hours ago | parent | prev | next [-]

Well maybe they should "project" a certain amount of revenue that goes to savings every year automatically, instead of waiting for a boom year windfall.

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JumpCrisscross 4 hours ago | parent | prev | next [-]

> in boom years the state can't accumulate any general funds for recessions

Genuine question: have states had the discipline not to raid these coffers in the boom years?

The alternative is borrowing in downturns. That works because during recessions interest rates are low. The opposite problem then manifests, however, which is the state continuing to borrow through the recovery.

Maybe instead of citing shortfalls and surpluses, such laws should cite unemployment and income growth.

	▲	yongjik 43 minutes ago \| parent [-]
		> have states had the discipline not to raid these coffers in the boom years? "Let's give the money back to voters because they will like that and we'll figure out something else in tough years" is, like, the quintessential example of "raiding these coffers." It's basically like big tech companies turning profit into stock dividends because investors love it and the CEO will be handsomely rewarded, and who cares about long-term R&D. When big companies do that we blame MBAs and capitalism.

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Supermancho 5 hours ago | parent | prev [-]

> Oregon's kicker law is a textbook example of bad economic policy, sadly

You must be talking about non-economic textbooks, otherwise this makes no sense.

	▲	lotsofpulp 4 hours ago \| parent [-]
		Oregon has a biennial budget, so some Oregon employee predicts how much money Oregon will earn over the next 2 to 3 years (which is basically impossible to do), and then Oregon leaders have to come up with a spending plan equal to or less than that revenue estimate. However, Oregon's costs have no relation to the revenue that the state predicted it would get, so it is constrains the solution space when unforeseen costs or cost trends happen. For example, Oregon predicts a certain amount of revenue, but gets 3% more than the predicted revenue, but that is because prices for everything went up 3% more than expected, now Oregon has less money than it needs to pay its expenses (since it has to return any revenue which was 2% over the estimate). Oregon is the only jurisdiction I have ever heard of with this kind of strict refund law, and its rigidity seems to be the main issue, along with the 2 year forecast requirement (since forecasting even 1 year is hard enough).