SACRAMENTO >> Repeating calls for fiscal restraint and seeking to lower expectations about how much more the state can afford, Gov. Jerry Brown on Friday released an updated $122.2 billion state budget that’s slightly smaller than the blueprint he pitched in January.
Tax collections outpaced the governor’s conservative estimates and forced him to increase the size of the general fund spending plan each of the last few years. This time, the $454 million revision came as Brown acknowledged that revenue growth had stalled.
The governor blamed the slump on an unexpected dip in the notoriously volatile capital-gains taxes collected by the state on the sale of stocks and bonds and said managing the state budget is “like riding a tiger.”
“The surging tide of revenue has begun to turn,” Brown said. “Quoting Aesop’s fable of the ant and the grasshopper: ‘It is best to prepare for the days of necessity.’ “
Blockbuster deals Brown struck with the Legislature to gradually boost California’s minimum wage to $15-an-hour and plug a billion-dollar hole in the Medi-Cal budget by passing a replacement tax on health care plans were another feature of the Capitol news conference.
The governor had resisted a more modest wage hike proposed last year before deciding to work with lawmakers and labor leaders to craft the framework of the historic compromise measure, which gives small businesses extra time to comply.
A proposal to replace an expiring tax on managed health care plans that had won some praise from the plans themselves was a major feature of the budget for the fiscal year that begins in July that Brown released in January.
Several weeks later, Democrats and Republicans came together to pass the tax, avoiding a cutoff of $1.1 billion in federal matching money and substantially boosting funding for developmentally disabled Californians for the first time in more than a decade.
The revised budget also includes a provision to ease homelessness.
“Governor Brown’s budget revisions are a solid step in the right direction,” observed Senator Mike McGuire. “His endorsement of the $2 billion State Senate homeless services and housing bond will help tens of thousands of Californians who call our streets home and who receive shelter and services, by building over 14,000 units all across the State.”
In January, Brown’s budget plan predicted that the state’s three largest revenue sources — the personal income tax, sales tax and corporation tax — would grow modestly in fiscal years 2016-17 and 2017-18 before dropping off a bit the next year.
The revised spending blueprint the governor released Friday predicts these sources of revenue will help keep the budget balanced over the next two years, but that the state’s commitments will exceed expected revenues in the years that follow, with annual shortfalls forecasted to exceed $4 billion by 2019 — or worse with an economic slowdown or recession.
The lower-than-expected revenue had little impact on the budget’s investment next year in K-12 schools and community colleges, which Brown touted eagerly.
The spending plan increases state funding per student to more than $10,500 — an increase of $3,600 compared with 2011-12.
Senator McGuire does have some concerns about the Governor’s proposed transportation package.
“While I applaud the Governor’s focus on California’s crumbling transportation infrastructure, I don’t believe his proposal goes far enough to dig us out of the $130 billion deferred maintenance hole that we’re in. We’ll need to continue to work together to achieve a more robust transportation package, which means sitting down and combining the proposals from the Governor and the Legislature in the coming months,” McGuire said.
