Once More, With Feeling: Brown Again Urges Fiscal Prudence In Final Budget Proposal

Gov. Jerry Brown was in full professor mode as he unveiled chart after giant chart on Wednesday morning inside the Capitol, laying out California’s financial situation and his plans for the coming year.

“You have our piggy bank, which is the Rainy Day Fund. And you can tell,” he told the audience, as he gestured to a chart showing a mostly but not completely filled in outline of a pig, “we want to fill it up.”

Brown sent this annual budget proposal to the California Legislature Wednesday for the sixteenth and final time. He begins his last year in office with state revenues gushing in by the billions of dollars. Yet with his trademark warnings of fiscal prudence, the governor once again sought to set an austere tone for a budget debate that will stretch into June.

(Check out our budget blog here.)

No surprise that Brown would strike the same overtures of fiscal caution that he has in previous budget unveilings. To justify this approach, he highlighted how the volatile California tax structure that is swelling coffers now has previously forced massive budget cuts during recessions — including the $27 billion deficit he inherited back in 2011.

“We can talk about spending now and cutting later, or filling the reserves and continue our spending right along,” Brown said. “So, this is about steady-as-you-go, or exuberance followed by regret — and pain.”

In this year’s budget proposal, the governor aims to increase money for K-through-12 schools — fully funding his Local Control Funding Formula two years early to provide additional money to districts that predominantly serve low-income students, English language learners and foster youth — and health care for low-income Californians through the state’s Medi-Cal program. He also wants to offer a free year of community college tuition, and create the first online community college.

Beyond those and a few other hand-picked spending increases, Brown wants to set aside nearly all of his projected $6 billion surplus. Legislative Democrats may not object to the governor putting $3.5 billion of that pot into the Rainy Day Fund to meet its constitutional target of 10 percent of the state’s general fund. But they’ll surely seek to use much of the rest of it.

“That’s the beginning of kind of this dance — the state budget negotiation dance, if you will,” is how state Sen. Holly Mitchell (D-Los Angeles) put it.

Mitchell, who chairs the Senate Budget Committee, hopes to negotiate cost-of-living increases in state grants for low-income, elderly and disabled Californians.

Assembly Budget Chairman Phil Ting (D-San Francisco) wants to expand the state’s Earned Income Tax Credit, among other priorities. “We believe that, over the next four months, there’s plenty of opportunity to discuss universal health care, universal early education for four-year-olds,” Ting said.

And there will surely be a battle over higher education funding: The governor is proposing smaller-than-expected increases to the University of California and California State University systems, while demanding they keep tuition flat. He feels the UC and CSU don’t do enough to keep their budgets under control.

California Faculty Association President Jennifer Eagan says that, under the governor’s proposal, tens of thousands of qualified students would be turned away every year. “The CSU is desperately underfunded compared to the way it was 25 or 30 years ago, and it’s really starting to show,” she said.

Republicans generally praised the governor’s fiscal caution but want any extra money to be spent not on social services, but instead on paying down pension and retiree health care debt — and on infrastructure. Assembly Budget Committee vice-chairman Jay Obernolte (R-Hesperia) calls infrastructure a “fundamental requirement of government that’s slipped away over the years. “

“In the 1960s, we spent over 20 percent of state revenue on infrastructure,” Obernolte said. “Lately, it’s been between 1 and 3 percent. This is a golden opportunity to rectify that.”

Brown does call for spending $4.5 billion in new gas tax and vehicle fee revenue on road repairs and public transit projects. But many Republicans hope voters will overturn the tax and fee hikes, part of last year’s transportation funding law, in this November’s election — the same election in which voters will pick Brown’s successor.

The governor laced his remarks with words of warning and wisdom for whoever replaces him next year. He pointed to another chart, showing that California’s economic recovery is nearing the longest ever since World War II.

“The next governor is gonna be on the cliff,” Brown said during his final remarks. “And that big red line, that’s what I’ve had. What’s out there is darkness — uncertainty, decline — and recession.

“So, good luck, baby!”