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California agency projects $7 billion surplus next year

SACRAMENTO, Calif. — The nonpartisan Legislative Analyst’s Office predicts California will have a $7 billion surplus next year but cautions lawmakers not to spend all of it.

The analysis says California’s budget is in good condition because the state has enough money to make it through a typical recession. The analyst’s office expects California’s savings account to grow to $18.3 billion by the end of the 2021 fiscal year.

The size of the surplus depends on whether the Trump administration lets California tax the groups that manage the state’s Medicaid plans. The tax is expected to generate about $2 billion, but it requires federal approval.

The analyst’s office said some signals suggest the economy could weaken. Because of that, it recommends lawmakers spend no more than $1 billion of the surplus on ongoing programs.

The Associated Press