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Our analysis of the governor's proposed 2019-21 state budget finds that it addresses several important priorities, but leans on a net increase in taxes and a drawdown of state reserves to help finance the cost. A key question is whether it strikes the correct balance between needed re-investment and prudent financing.

Our state budget brief discusses several key issues likely to dominate budget deliberations, including:

• Reserves: In the first year, the governor’s budget would take in substantially more in general purpose revenue (GPR) than it spends, raising the general fund ending balance to $937.9 million. In the second year, however, the budget proposes spending $832.6 million more than projected revenues. The state would close the year with just $105.3 million in the general fund, the lowest amount since 2011.
• Taxes: The governor’s budget includes a two-year, $688.7 million net increase in collections of GPR income, sales, and excise taxes. It proposes a 10% income tax cut for middle-income taxpayers, as well as...
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