Brown's New Budget Stays Cautious, Holds UC’s ‘Feet to the Fire’ on Reform
Gov. Jerry Brown unveiled an updated state budget Thursday with $124 billion in general fund spending, reflecting an improved revenue picture since January.
But the governor noted that despite the slightly higher revenues, the "May Revise" revenue projections are still lower than last year's expectations. The additional revenue comes mostly from stronger personal income tax receipts due to the strong stock market.
With the additional revenue, the $1.6 billion shortfall included in the governor's January budget has fallen to about $400 million.
Unlike his earlier proposal, this one includes funding for Democrats' favorite priorities, such as continued increases for child care providers and dental benefits for Medi-Cal recipients.
As always, the governor saw the revenue glass as half empty, rather than half full, and cautioned about higher spending.
"In the coming year I don’t think more spending will be possible," Brown said, noting pressures from Washington and concerns about a future downturn in the economy.
"This is not rhetoric, this is reality," Brown said. "There's only so many cookies in the jar, unless you can go get another tax."
The governor cautioned about a potentially dire impact to the state budget from "Trumpcare," the Republican health care plan. But he refused to say how he'd respond to such cuts.
"You're not going to get an answer because what you'd have to do is ugly," Brown said, vowing instead to fight those changes in Washington.
In response to a recent state audit of the University of California, Brown's budget sequesters $50 million earmarked for UC "to hold their feet to the fire" until the university implements reforms outlined by the audit.
Republicans in the Legislature were not enthusiastic about the revised budget.
"Unfortunately, this proposal fails to move California in the right direction," said Assembly Republican Leader Chad Mayes (R-Yucca Valley).
"Voters recently approved taxes specifically to fund increased access to health and dental care and to support our schools. But this budget pulls a bait and switch, sending that money to the general fund while ignoring our health and dental care needs and eliminating programs like Career Technical Education in our schools," Mayes said.
Jay Obernolte (R-Hesperia), vice chair of the Assembly Budget Committee, was slightly more positive.
“In light of the uncertainty facing California, the governor’s budget proposal makes some responsible choices," he said. "In particular, I am pleased that we are beginning to pay down the $200 billion of unfunded pension retiree health care liabilities."
But Obernolte criticized the governor's priorities for use of the tobacco tax increase approved last year by voters.
"I am concerned that the governor’s plan ignores the will of the voters by redirecting that money to the general fund for other purposes," he said.
In January, Brown spent much of his budget unveiling by warning of the state's volatile tax structure and sounding a note of caution about the potential fiscal impacts that a Republican-controlled Congress and White House could bring California's bottom line. He proposed pausing some planned spending increases to education, eliminating a $400 million fund for affordable housing and halting $300 million in planned spending to modernize state office buildings.
Controversially, he also proposed halting new enrollment in a higher education scholarship fund that was championed by the Assembly several years ago. The revised budget does not restore that funding.
Housing, child care and higher education spending are among the issues some Democratic lawmakers have cited as priorities recently. The Women's Caucus vowed to fight any cuts to child care expansion, and today issued statements praising the new budget for restoring earlier cuts aimed at child care providers.
Under a budget deal cut between lawmakers and the governor last year, the state is supposed to add thousands of new slots for state-funded preschool and increase reimbursement rates for child care providers over the next several years.
In recent years, much of the budget disagreements between lawmakers and Brown have centered on the Democratic governor's cautious revenue estimates, and Democratic lawmakers' desires to reinvest in social and welfare services cut deeply during the last recession. But this year, the uncertainty surrounding federal health care funding has added to the pressure.
Other potential points of conflict with lawmakers and interest groups include:
Whether the governor digs in on his interpretation of Proposition 56, a $2-a-pack tax on cigarettes passed by voters last year. In January, Brown proposed using the bulk of the $1.8 billion in increased funds to pay for normal cost increases to the state's Medi-Cal program; proponents of Proposition 56 think the money should be used to expand Medi-Cal services.
What happens with the state's cap-and-trade program in the coming months, a key component of the state's plans to reduce carbon emissions to 1990 levels by 2020, and to 40 percent below 1990 levels by 2030.
The governor reiterated Thursday that about half the funds from cap and trade go to mitigate the impact of pollution on low-income communities.
The constitutional deadline for passing the budget is June 15, but with the passage of Proposition 54 it will have to be in print 72 hours before legislators vote on it.