While the LAO is painting a bright picture of the California budget, the Sacramento Bee reports the state is headed for a $1.9 billion dollar budget shortfall.
The Legislative Analyst's Office has just issued the following report:
The 2013-14 Budget: California's Fiscal Outlook
The 18th annual edition of the LAO's Fiscal Outlook—a forecast of the state's budget condition over the next five years—shows that California's budget situation has improved sharply. The state's economic recovery, prior budget cuts, and the additional, temporary taxes provided by Proposition 30 have combined to bring California to a promising moment: the possible end of a decade of acute state budget challenges. Our economic and budgetary forecast indicates that California's leaders face a dramatically smaller budget problem in 2013-14 compared to recent years. Furthermore, assuming steady economic growth and restraint in augmenting current program funding levels, there is a strong possibility of multibillion-dollar operating surpluses within a few years.
This report (52 pages) is available using the following link: http://lao.ca.gov/laoapp/PubDetails.aspx?id=2668.