Despite tax increases approved by voters last week, the latest state fiscal review from the Legislative Analyst says California will still face a $1.9 billion shortfall in the fiscal year that begins July 1 2013. But after that, the report says, revenues should climb faster than expenses, producing the first surplus in years at the end of the 2014-15 fiscal year, and annual surpluses could climb to $9 billion after that. But the LAO cautions that these numbers assume that the Legislature and governor don’t add new programs, and the analyst suggests that the state use the surplus to build a healthy reserve and begin paying down its public employee retirement obligations. See the full report here.

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