The California Legislative Analyst’s Office has said it makes sense for Gov. Jerry Brown to use $411 million for the budget from the state’s share of a nationwide settlement with five major banks over illegal foreclosures.
The LAO added in a report Tuesday that Brown should use the whole amount this year, rather than spread it out over the next three budgets.
However, the LAO warned that some of the holes the governor wants to plug using the settlement money may fall outside of the agreement since they do not fund things that would help homeowners.
But it said the state Legislature is not under the same restriction and may appropriate the money.
As part of the settlement agreement, the U.S. Department of Justice said California could use $41 million for general use but that 90% of the money, $370 million, must be used for the benefit of homeowners, consumers or to prevent fraud.
In his May Revise budget, Brown’s projected a budget gap of $15.7 billion for the next fiscal year.
Last week, the analyst’s office said it is concerned Brown has overstated by around $900 million how much property tax revenue schools will get from the closing of redevelopment agencies.