The state’s legislative analyst says Gov. Jerry Brown’s revised budget proposal is too pessimistic — to the tune of $3.2 billion. That’s how much more revenue the analyst expects by the end of the next budget year than the governor is forecasting. This shouldn’t be a big surprise. In good times, governors tend to take the most conservative approach to economic forecasting in an effort to keep money off the table for the Legislature. But the analyst says the governor’s forecast for capital gains taxes does not take into account higher taxes investors will pay on this year’s gains even if the stock market is flat for the rest of the year. The analyst strongly encourages the Legislature to use the extra money to pay down debt and start building a rainy day fund for the future. See the full report here.