The state's top fiscal analyst said today that it "makes sense" for California to help bridge its $15.7 billion deficit with mortgage settlement money, and that the state should be even more aggressive by using more money upfront than Gov. Jerry Brown proposed.
The state will directly receive about $411 million from a multi-state settlement with five banks over their foreclosure practices. Brown has proposed using $292 million of that to solve the current deficit, saving $118 million for the following year, but the nonpartisan Legislative Analyst's Office recommended today that lawmakers use all $411 million of it now.
Brown has proposed using funds to retire a share of housing bond debt and pay for costs in Department of Justice and Department of Fair Employment and Housing programs.
The Analyst's Office said there may be legal risks involved because some money would pay for investigating organized crime, gangs and drug trafficking - none of which are related to the mortgage crisis. But the Analyst's Office believes "the magnitude of the additional budget year savings justifies any legal risk associated with offsetting General Fund costs less directly related to the settlement."