As we wrote in our report on the causes of the projected budget shortfall, the Legislature adopted appropriations for 2023–25 that greatly exceeded expected revenues. Appropriations for 2023–25 are 15.8% higher than 2021–23 spending. At the time this appropriations level was adopted, revenues were expected to be just 3.5% higher in 2023–25 than in 2021–23.

Since then, the revenue forecast has decreased. The November 2024 revenue forecast estimates that 2023–25 revenues will be 2.6% higher than 2021–23. Consequently, 2023–25 appropriations exceed currently expected revenues by $5.555 billion.

Since 2019–21, spending has increased by 39.4% while forecasted revenues have increased by 25.0%. Since 2013–15, spending has increased by 113.8% while forecasted revenues have increased by 93.5%.

It is the mismatch between spending and revenues in 2023–25 that is the root of the problem, not the decrease in the revenue forecast since the last budget was adopted. (Additionally, revenues are expected to continue to grow, by 7.6% in both 2025–27 and 2027–29.)