The nonpartisan Legislative Analyst's Office issued its first-blush report on Gov. Arnold Schwarzenegger's revised May budget and called the cornerstone of his plan -- borrowing against future lottery revenues -- "overly optimistic."
The governor's plan calls for modernizing the state lottery with the hopes of increased revenues over the next three decades and selling those projected revenues for $15 billion up front in the next three years.
"The administration makes overly optimistic estimates about the potential growth in lottery sales and profits. Consequently, its securitization proposal would create the strong likelihood that distributions to public education from the lottery would fall well short of their current levels--perhaps by $5 billion over the next 12 years combined," the LAO reports.
Read the agency's analysis here.
The LAO also criticizes the governor's budget reform plan, calling it "overly complicated."
"Under our revenue estimates, the administration's revenue cap leads to counterproductive results--the required deposit of General Fund monies into a new reserve at the same time that the state faces multibillion dollar shortfalls," reads the report.
On the revenue side, the LAO largely agrees with the Schwarzenegger administration, calling its forecasts "reasonable" and projecting a reserve of $500 million less than the administration if the budget were approved as proposed.
The Bee's Judy Lin has more.
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