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Key takeaways from recent LAO publications as of February 28, 2023

Our office will publish shorter, more focused budget analyses over the next few months. In most cases, rather than sending out an announcement for each publication, we will provide periodic updates with the key takeaways from recent pieces. All of our 2023-24 budget analyses to date can be found here.

The 2023-24 Budget: Financing Approaches for Capital Outlay Projects

  • Recommend the Legislature Consider Shifting Capital Outlay Financing from Cash to Lease Revenue Bonds. The Governor proposes a mix of lease revenue bonds and General Fund cash to finance capital outlay projects. Ultimately, the Legislature’s financing approach will depend on how it weighs support for short-term budget priorities against reducing long-term budget obligations. However, given the current budget problem facing the state, the Legislature might want to switch to lease revenue bonds instead of cash financing for some of the projects.

The 2023-24 Budget: CalRecycle’s Zero Waste Plan Proposal

  • Proposes Funding to Conduct and Implement a Zero Waste Plan. The Governor’s budget includes $2 million one time plus $300,000 ongoing from various special funds to develop and implement a zero waste plan. The plan would be completed in 2025 and would identify steps needed to meet and exceed the statutory goal of recycling at least 75 percent of statewide solid waste.
  • Recommend Legislature Reject Proposal. We recommend the Legislature reject the proposal given that (1) many of the activities that would be completed under this initiative should already be occurring within the department, (2) the plan would become quickly outdated as recently enacted legislation is implemented, and (3) the high-level nature of the plan would make it difficult to identify specific improvements to individual programs.

The 2023-24 Budget: California’s Film Tax Credit

  • Governor Proposes Five Year Extension of Film Tax Credit. The Governor’s Budget proposes to extend the state’s film tax credit for five years and to make the credit refundable.
  • Decision on Extension Should Depend on How the Legislature Prioritizes the Importance of Hollywood. We do not recommend considering the film tax credit as a reliable mechanism to grow the state’s overall economy. Instead how the Legislature assesses a potential extension should depend on how much it prioritizes the importance of maintaining Hollywood’s centrality in the motion picture industry.
  • If Extending the Credit, Refundability Worth Considering but With Modifications. If the Legislature elects to extend the credit, refundability is worth considering but with modifications to achieve some benefits of refundability while limiting the downsides.
This article was released by the Legislative Analyst’s Office.