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Governor's budget raises Proposition 98 but proposes $1.6 billion settle‑up delay; LAO flags revenue risk
Summary
The governor's January budget projects a higher Proposition 98 guarantee and funds a mix of ongoing and one‑time K–12 priorities, but proposes a $1.6 billion delay of a settle‑up payment to manage revenue uncertainty—an approach the Legislative Analyst's Office warned could be risky given current stock‑market‑driven volatility.
The governor's January budget increases the projected Proposition 98 guarantee and includes new K–12 proposals while proposing to delay a $1.6 billion settle‑up payment into a later budget year.
Department of Finance analyst Alex Schope told the Assembly Budget Subcommittee on Education Finance that "the governor's budget forecast that the Proposition 98 guarantee amount for 25‑26 will be $118,900,000,000.0," and that the governor proposes $2.5 billion in ongoing LCFF increases, $1.8 billion ongoing to support transitional kindergarten expansion and lower adult‑to‑student ratios, and a $1.8 billion one‑time student support and professional development block grant.
The Legislative Analyst's Office (LAO) urged caution. LAO analyst Ken Capone told the committee that a large share of the projected revenue gains is tied to capital gains and the stock market, and warned of unusually high sensitivity in 2024‑25: "to the extent there are revenue changes in 2024‑25, that falls almost entirely on…
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