The 'Roller Coaster' of California State Budgeting after Proposition 13

Abstract

The purpose of this paper is to investigate the factors that have produced the boom-to-bust budget cycles that the State of California has experienced since the passage of Proposition 13. This is first done by examining historical budget patterns for the State to see if there is any evidence that they differ from what has been observed for states as a whole. The specific circumstances in California - constitutional restrictions, revenue reliance, demographics, future concerns, and public opinion - responsible for its budget patterns are then described. The paper concludes with a description of how the State's budget faired during the last business cycle and suggested policy reforms that could help alter the expected course of California's budget outcomes over such future cycles.