SACRAMENTO (CN) –Boasting the world’s fifth largest economy and coffers flush with better-than-expected tax collections, California’s Democratic governor and one-time Jesuit seminarian is once again preaching fiscal prudence.
With his own party clamoring to spend billions of the state’s budding surplus on social programs, Gov. Jerry Brown reiterated Friday that lawmakers should be stingy with the estimated $8.8 billion surplus and prepare for an inevitable change of fiscal fortune.
“As Isaac Newton once observed, what goes up must come down. This is a time to save for our future, not to make pricey promises we can’t keep,” Brown said. “Let’s not blow it now.”
Kicking off month-long budget negotiations with the Democratic-controlled Legislature, Brown revealed a $137.6 billion general-fund revised budget bill, his 16th and final proposal.
The revised spending reflects California’s increasingly rosy financial state. California is nearly $5 billion ahead of current year fiscal projections thanks largely to its wealthiest earners. According to Brown, California’s wealthiest 15,000 earners pay 25 percent of the overall income tax.
The state collected more personal income, corporate and retail sales tax in April than anticipated in Brown’s January budget introduction. Along with swelling coffers, data pegs California’s unemployment rate at its lowest since Brown re-took office in 2011.
But as is often the case in the Golden State, there is no shortage of lawmakers hoping to spend the surplus.
Earlier this week, Assembly Democrats announced a $1 billion spending package that would extend healthcare to an estimated 114,000 undocumented residents. Meanwhile mayors from California’s 11 largest cities are asking the state to dedicate $1.5 billion on housing for the state’s homeless population. State universities also want a piece of the surplus, not to mention a list of new courthouse projects waiting to be funded.
Instead of committing to new long-term programs, Brown wants to focus on one-time expenditures. The revise includes $2 billion for deferred maintenance on state buildings and infrastructure, $359 million in one-time spending for homelessness programs and $312 million for mental health programs.
Brown said he would be “reluctant to embark” on new long-term spending during negotiations with lawmakers because he wants to leave the next governor in a good spot.
“We’re already over-extended,” Brown told reporters. “I’m going to try and leave the most responsible budget I can to the next governor.”
Brown’s second stint as governor started with the Golden State mired in the Great Recession and his office tasked with patching up a $27 billion deficit.
The revised budget includes $199.3 billion in total spending, up from $190.3 billion in the January introduction. Lawmakers must pass a final spending bill by a June 15 deadline.
The fourth-term governor has consistently nixed spending requests from Democratic lawmakers during his final stint in Sacramento.
Instead, Brown has worked toward stashing the state’s rainy-day reserves with as much as constitutionally allowed. Voters passed Proposition 2 in 2014, which established a savings goal of 10 percent of general fund revenue. The revised budget calls for fully capping the Rainy Day Fund in 2018-2019.
Republican lawmakers appreciated Brown’s continued focus on filling state reserves, but urged Brown to spend the rest of the remaining surplus on infrastructure repairs and paying down the state’s massive unfunded pension liabilities.
Assemblyman Vince Fong, R-Kern County, gave a particularly bleak outlook of California’s current state of affairs. He said the booming economy and tax collections aren’t reaching the average resident while blasting the Brown administration.
“Despite record spending by Sacramento under this administration, quality of life for many Californians is getting worse every year. Hardworking families cannot afford to live and work here, housing costs are out of control, homelessness is overrunning our communities, crime is rising and traffic congestion is horrendous,” said Fong in a blistering statement.
Brown spent time talking about one of the largest issues facing the state; a homeless population that has grown during his fourth-term and shows no sign of slowing.
“It’s going to take a more enforceable framework that will get these people into the kind of treatment they need, not just leave them to wander around the streets and come into the emergency rooms,” he said. “We need to interrupt and interdict the cycle; that will take leadership because it’s going to require changes in the laws that currently exist.”
While Brown signed a $2 billion homeless housing bond in 2016, the funds have not been spent because they are tied up in litigation. Critics say the bond should have been approved by voters and are fighting to stop the $2 billion in state court.
In an effort to free up the funds, Brown proposes putting the $2 billion for homeless to voters this fall.
After flipping through financial charts and introducing his new dog Callie, Brown reflected on the challenge of managing California’s volatile tax system facing the next governor.
“How do you ride the tiger is what California now has to face,” Brown concluded. “It’s a hell of a way to run a railroad.”
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