California has ‘extraordinary’ budget surplus, analysts say

SAN FRANCISCO, CA - AUGUST 22: California Lt. Gov. and California gubernatorial candidate Gavin Newsom (L) laughs with a resident as he visits the Alice Griffith Apartments on August 22, 2018 in San Francisco, California. Lt. Gov. Gavin Newsom and San Francisco mayor London Breed toured a low-income housing complex. Newsom leads Republican gubernatorial candidate John Cox by an average of 23 percentage points in recent polls. (Photo by Justin Sullivan/Getty Images) less SAN FRANCISCO, CA - AUGUST 22: California Lt. Gov. and California gubernatorial candidate Gavin Newsom (L) laughs with a resident as he visits the Alice Griffith Apartments on August 22, 2018 in San Francisco, ... more Photo: Justin Sullivan / Getty Images Photo: Justin Sullivan / Getty Images Image 1 of / 33 Caption Close California has ‘extraordinary’ budget surplus, analysts say 1 / 33 Back to Gallery

SACRAMENTO — Good news for Gov.-elect Gavin Newsom: California’s budget is in “remarkably good shape,” according to a forecast for the coming fiscal year that the nonpartisan Legislative Analyst’s Office released Wednesday.

The forecast estimates that the state will have a $14.8 billion surplus during the 2019-20 fiscal year on top of $14.5 billion in rainy day savings.

“By historical standards, this surplus is extraordinary,” the analyst’s office wrote.

Newsom will release his first budget in January, shortly after he is sworn in to replace Gov. Jerry Brown.

Brown made it a priority to direct budget surpluses to the state’s rainy day fund, arguing that it was a cushion against an inevitable recession.

In its report, the analyst’s office urged caution with the predicted surplus, noting that real life can wreak havoc with forecasts. For example, it projected a $10.3 billion surplus in 2001-02, but the dot-com bust helped to turn that into a $12.4 billion deficit.

“The (nearly) $15 billion surplus we anticipate for 2019-20 gives the Legislature a unique opportunity to prepare for these foreseen — and other unforeseen — challenges still to come,” analysts wrote.

Newsom is coming off a campaign in which he promised several costly endeavors, including creating universal health care, tackling the state’s housing crisis and expanding early childhood education programs.

He will negotiate the budget with Democrats who will hold a two-thirds supermajority in both houses of the Legislature. Most of them will have their own wish lists.

“We must make smart investments and proceed with caution to protect programs for the long run,” said Assemblyman Phil Ting, D-San Francisco, chair of the Assembly Budget Committee. “No one wants to relive the devastating budget cuts we were forced to make only a short time ago.”

Melody Gutierrez is the San Francisco Chronicle’s Sacramento bureau chief. Email: mgutierrez@sfchronicle.com Twitter: @MelodyGutierrez