1. LAO Proposed Total State Spending By Major Program Area

2. LAO State Revenues in 2002-03 (In Billions)

3. LAO Revenues Have Been Much More Volatile Than State’s Economy

4. LAO Current Recession Expected to Be Mild by Historical Standards

5. LAO The PIT Has Become California’s Dominant Revenue Source Total General Fund Revenues

6. LAO Income Has Become Concentrated At High End of Distribution

7. LAO High-End Income Subject to Large Swings

8. LAO Nonwage Income— Key Source of Revenue Fluctuations

9. LAO California’s Job-Gaining and Job-Losing Industries in 2001 Percent Change in Jobs December 2000 Through December 2001 Change in Number of Jobs (In Thousands) -10-8-6-4-2024% Business Services Manufacturing Transportation Construction All Industries Trade Professional Services Finance, Insurance, Real Estate Health Services Government 66 25 16 12 -16 -22 -117 -118 -121

10. LAO Current Recession Centered in Bay Area

11. LAO Recession’s Impacts—Mild Job Losses but Severe Income Declines

12. LAO LAO Forecasts Steeper Decline In Options and Gains Than DOF