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Legislative Analyst’s Office publishes report on Evaluating State Economic Stimulus Proposals

The Legislative Analyst’s Office has just published the following report:

Evaluating State Economic Stimulus Proposals

The state can seek to encourage short-term economic activity through fiscal stimulus. During economic slowdowns, like the one the state currently is experiencing, interest in these types of economic stimulus programs is heightened. In this report, we offer the Legislature the following guidance on how to evaluate stimulus proposals:

  • Recognize the limitations on state funded stimulus. Unlike the federal government, the state must balance fiscal stimulus with other one-time and ongoing spending priorities.
  • To assess stimulus proposals, we suggest asking about the source of funding, timing considerations, equity implications, and several other factors regarding the costs and benefits of the proposal.
  • Given the state’s spending constraints, economic stimulus is most likely to be effective if proposals:
    • Are funded using federal funds, a state General Fund surplus, or proceeds from previously authorized bonds.
    • Efficiently advance other legislative policy objectives.
    • Complement (and do not duplicate) other federal or state programs.
    • Can be implemented quickly.
    • Are well designed and clearly targeted.
    • Avoid making existing inequities worse.

Please note that this report represents our general guidance on economic stimulus. For our specific guidance on the administration’s recent stimulus proposals, please see the following reports and handouts:

For other publications on California’s economy and taxes, please visit our Economy and Taxes page.

This article was released by the California Legislative Analyst’s Office.