Spending Upped to $108B in Latest CA Budget

SACRAMENTO, Calif. (CN) - After finding an extra $2.4 billion underneath the Golden State's couch cushions, Gov. Jerry Brown unveiled his May budget revision that anticipates a record $107.8 billion in spending.

The general fund spending plan - which funds California's day-to-day operations - is about a billion more than Brown's preliminary budget released in January and represents a 24 percent increase from the budget approved for the 2011-12 fiscal year, the darkest days of California's recession.

That year saw agency budgets gutted, school districts shortchanged and workers furloughed. What a difference a year makes, however: When this fiscal year ends June 30, the state expects a $4.4 billion surplus, thanks in large part to the aforementioned $2.4 billion in capital-gains taxes from a white-hot stock market last year.

Brown acknowledged, however, that capital gains are a fickle revenue source and vowed to start setting aside up to 10 percent of revenue in a rainy-day fund - starting with the 2015-16 budget, assuming voters approve the plan in November.

The governor's revision also contains more money for the California Medical Assistance Program (Medi-Cal), since the federal Affordable Care Act has swelled that agency's enrollment to 11.5 million - 30 percent of all Californians. And Brown promised the state's beleaguered trial courts an additional $60 million, provided the Judicial Council slashes court-operating costs.

Brown also promised to pay down what he calls California's "Wall of Debt" completely by 2018. His revised budget additionally tackles the severely underfunded teacher-pension system CalSTRS, which the nonpartisan Legislative Analyst's Office said last week is upside-down by an estimated $75 billion.

It will take 30 years to right CalSTRS if legislators approve the plan - three years before the fund is expected to run dry, Brown said. His revised budget starts the process with a $450 million down payment in the upcoming fiscal year, and splits future costs between the state, school districts and teachers.

The Legislative Analyst's Office also announced last week that California's total debt and underfunded liabilities tops $340 billion - $8,500 for each of the state's 38 million residents.

Despite this, Brown's revised budget faces challenges in the Legislature where the Democratic majority wants to restore social programs cut during the Great Recession with the extra money under the state's couch cushions.

"It's a status quo budget," Senate President pro Tempore Darrell Steinberg, D-Sacramento, said. "There's a lot to talk about. All the concepts about rainy-day funds and paying down debt are sound, but there's also a lot of unmet need in California."

Republicans meanwhile criticized the governor for holding on to his high-speed-rail pipe dream - using carbon-tax money - and not spending enough on drought relief, even as the state faces an unprecedented shortage of rainfall.

"While I'm very pleased that our negotiated rainy day fund is included in the governor's revised budget, I was surprised and disappointed that he didn't address other important priorities - water storage and drought relief, higher education and other investments to help grow our economy," Assemblywoman Kristen Olsen, R-Modesto, said.

Brown's potential opponents in the November election sounded off with their disapproval as well.

"Gov. Brown just committed the earnings of our children and our children's children to fuel this insatiable growth of government, which will prove over time to be unsustainable," said Assemblyman Tim Donnelly, R-Hesperia, a candidate for governor. "Instead of securing the future of Californians, the governor's actions have put them and their children's future at even greater risk."

Donnelly's GOP opponent, Neel Kashkari, called Brown's revised budget a crap shoot.

"He is crossing his fingers and hoping for a roaring stock market to deal with California's unfunded liabilities," Kashkari said. "Hope is not a strategy."

The Legislature is constitutionally mandated to pass a balanced budget by June 15.

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