Calif. Governor Unveils 9-Figure Budget

     SACRAMENTO (CN) – California’s rebounding economy led Gov. Jerry Brown to propose a record $113.3 billion general fund budget Friday, and promise a compromise with the University of California after denying its request for more money.
     The 2015-16 proposal includes $44.5 billion in special funding and $4.9 billion from bonds. The $164.7 billion total budget is the largest ever proposed, a $9 billion increase from last year.
     “The budget is carefully balanced and builds for the future,” Brown said. “California is in a very solid position.”
     Not included in the proposal was an additional $120 million for higher education, which the University of California wanted. Instead, a special committee formed by the Governor’s Office and the UC Regents will be tasked with reducing the UC cost structure.
     “We’re going to look at the disciplinary structure and the whole gamut to find compromise,” Brown said. “Savings can be had.”
     The UC system did receive an increase in spending, contingent upon a freeze of tuition rates, said state Finance Director Michael Cohen.
     The budget proposes total funding for higher education of $28.7 billion, an increase of $1.2 billion from last year.
     Public education receives a $2.5 billion increase, backed by Proposition 98 funds. The proposal reflects a $2,600 increase per student compared to 2011-12, and a total of $50 billion toward K-12 education.
     The greatest consensus for spending was education, with low-income students largely benefiting from the increase and the Proposition 98 allocations.
     Medi-Cal will account for two-thirds of overall health and human services spending, due to the increased number of applicants after the federal healthcare reform act.
     “Healthcare extra spending has been tremendous,” Brown said of the estimated 12 million Medi-Cal users, up from 7.9 million in 2013.
     Asked no extra funds for Medi-Cal coverage for undocumented immigrants, Brown said he would wait for President Obama to act on the controversial issue.
     Brown’s budget contributes $1.9 billion toward retiree health care. The governor said he hopes to eliminate unfunded liability by 2045. Brown dismissed any possibility of using Proposition 2, or the rainy day fund, toward the unfunded liability.
     “No, we’re going to keep Prop. 2 for the next recession,” Brown said. “I want to build up the rainy day fund, use it sparingly.”
     The budget directs $2.9 billion to the rainy day fund. It will repay the remaining $1 billion in deferrals to schools and community colleges, and makes the last payment on the $15 billion in Economic Recovery Bonds borrowed to cover budget deficits from as far back as 2002.
     Brown did not comment specifically on climate change but his proposal calls for $1 billion for low-carbon transportation, sustainable communities, energy efficiency, urban forests and the high-speed rail project.
     Recent history has shown that small surpluses have turned quickly into large deficits, Brown said while presenting a graph of recent California budgets.
     “The budget is precariously balanced; we have to work in a way that’s sustainable for the future,” the governor said.

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