As always, the ERFC also adopted optimistic and pessimistic alternative forecasts. Under the optimistic scenario, revenue exceeds the baseline forecast by $1,560 million in 2019–21 and by $3,849 during 2021–23. Under the pessimistic scenario, revenue falls short of the baseline forecast by $1,836 million during 2019–21 and by $4,778 million during 2021–23; under this scenario 2021–23 revenue would be less than 2019-21 revenue. The ERFC assigns a 15 percent probability to the optimistic scenario and a 35 percent probability to the pessimistic scenario.
Give some weight to the downside probabilities, he says.
Given the substantial probability the ERFC places on the pessimistic scenario, the governor should propose a budget that preserves a healthy four-year reserve.