Brown Ups California Budget, Despite Revenue Declines

SACRAMENTO, Calif. (CN) – On the heels of sluggish April income-tax totals and looming federal health care funding cuts, California Gov. Jerry Brown on Thursday called for prudence and said it’s crucial for the state to slow spending on social programs.

While introducing his $124 billion general-fund revised budget, Brown once again warned that the economic turnaround “won’t last forever” and said he hopes to avoid being caught off-guard by a recession like previous administrations.

“I’m trying to set the stage because I think we’ve had a long period where we don’t think about the past,” Brown said.

The Democratic governor foreshadowed future cuts to social spending, saying the state can’t sustain yearly increases and continue to build the state’s rainy-day fund. He said the state has increased spending to fight poverty by $19 billion over the last eight years, for example, and that “cuts are coming.”

“There’s been a lot of spending but as we all know, in California we don’t live in a fixed world of straight-line revenues that keep rising and never go down,” Brown said. “We’ve had 10 recoveries and 10 recessions since World War II.”

The revised budget came one day after state revenue reports revealed that April personal income tax returns lagged $700 million behind expectations. Meanwhile, year-to-date revenue totals are $1.8 billion behind the current budget’s projections.

“This is another signal that we may be inching towards an economic downturn, and we must tailor our spending accordingly,” State Controller Betty Yee said in a statement.

The budget increased 2.2 percent from January’s version for a total of $183 billion.

The announcements set off the final round of budget negotiations between Brown and the Legislature over the next month. The final 2017-2018 budget must be approved by June 15.

Thursday’s revised plan carries the same cautious approach as Brown’s January proposal, with a few notable changes. It adds $2.5 billion in revenue expectations from the initial plan, but Brown said his financial advisors are still predicting an economic slowdown despite the increase.

The revision withholds $50 million in additional University of California funding until it complies with the recommendations of a recent scathing audit which found administrators have stashed $175 million in reserves under the nose of lawmakers.

Specific funding for the estimated $275 million repair of the splintered Oroville Dam spillways was not detailed in the new budget plan. The damaged spillways caused widespread evacuations beneath the nation’s tallest dam in February, as operators struggled to safely release water from the reservoir.

After asking the Legislature last week for more money to ramp up the state’s fight against President Donald Trump’s immigration and environmental policies, state Attorney General Xavier Becerra’s Department of Justice was also supplied with an additional $6 million to fill 31 new positions. According to the department, it has spent over 11,000 hours in legal resources to respond to an array of new federal policies enacted under Trump.

The spending blueprint promises to build the state’s reserves to $8.5 billion by the end of 2018, and extends $500 million from the general fund toward pay increases for child care providers. The California Legislative Women’s Caucus applauded Brown’s child care proposal.

“Proper funding for providers will positively impact the predominantly female workforce that delivers care to our children, the families who can remain working, and for the children who benefit now. They are California’s future workforce,” said Assemblywoman Cristina Garcia, D-Bell Gardens.

Republicans balked at Brown’s revision, claiming it didn’t go far enough in paying off California’s debt, specifically its massive unfunded public employee retirement system.

“Pensions in California are on the verge of extinction if we continue to approve state budgets, year after year, without addressing the needed reform that will prevent the catastrophic collapse of our retirement system,” said Assemblyman Bill Brough, R-Dana Point.

The fourth-term governor said California will continue to fight the federal government’s push to replace former President Barack Obama’s landmark health care law, and called the health care bill that passed the House of Representatives last week an “abomination.” Brown said it’s crucial for California to guard its financial resources considering the uncertainty in Washington.

“The world of Washington is changing by the minute and the hour, so it’s very hard to predict what they will do,” Brown contended.

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