Deep in the bowels of the California Department of Finance, a
small group of economists toils at producing the economic
forecast on which the governor's budget is based. It's not
glamorous work, and too often it seems thankless; but it
certainly is interesting. The Department of Finance is in the
executive branch of California state government and, as such, is
part of the governor's administration. Its principal functions
are to prepare, enact, and administer the state's annual budget;
establish appropriate fiscal policies to carry out the state's
programs; and analyze legislation with a fiscal impact on the
state. The economics unit contributes to all three functions,
but its primary responsibility is producing the economic
forecasts on which budgets are based. As part of the annual
budget process, the unit develops three forecasts each fiscal
year. Each of these consists of a near-term national economic
forecast, a near-term California economic forecast, a Consumer
Price Index forecast, and a set of long-ra