California Governor Jerry Brown
“We’re nearing the longest economic recovery in modern history, and as Isaac Newton observed: What goes up must come down,” Brown said, upon his release of the revision. “This is a time to save for our future, not to make pricey promises we can’t keep. I said it before, and I’ll say it again: Let’s not blow it now.”
According to Brown’s office, as California’s economy has recovered from the Great Recession, the last five budgets have greatly increased spending in education funding and brought the state’s first earned income tax credit, a minimum wage that will rise to $15 per hour over time and the expansion of healthcare coverage to millions of residents.
The State has also reduced its budgetary borrowing, restored fiscal health to its retirement benefit plans and made significant improvements to the transportation and water systems, according to the governor’s office.
January’s budget proposal was projected to have a robust one-time surplus and focused the new funds on growing the state’s Rainy Day Fund to prepare for the next recession.
“Since that time, revenues have continued to grow,” states the introduction to Brown’s proposal. “Capital gains are projected to be at an all-time high, and state unemployment is at an all-time low. Despite strong fiscal health in the short term, the risks to the long-term health of the state budget continue to mount— the effects of the 2017 federal tax bill remain uncertain, the nation faces a host of global risks and the volatility of the stock market has returned.”
Four years ago, Californians voted to create a Rainy Day Fund to save money during strong economies to prepare for uncertain times in the future. The revision keeps the January budget commitment to fill the fund completely. By the end of this fiscal year, the fund will have a total balance of $9.4 billion and grow to $13.8 billion by the end of 2018-19. Also, to further protect against the next economic downturn, the revision proposes to direct an extra $3.2 billion into the state’s traditional budget reserve fund.
By the end of 2018-19, the country will have matched the longest recovery in modern history, according to the governor’s budget revision.
“The best way to buffer against uncertainty and protect against future cuts is to continue building the state’s reserves and avoid making substantial new ongoing obligations,” the proposal continues. “Consequently, the May revision proposes to use the surplus on one-time spending to address long-standing infrastructure needs, homelessness and mental health.”
California Attorney General Xavier Becerra said the revision provides a “prudent framework” for the state’s financial future, while investing in programs that help Californians thrive.
“The Department of Justice has a strong track record of efficiently and effectively fighting for Californians: from protecting the health of our people and our environment, to defending the civil rights of our most vulnerable populations, to cracking down on crime so that our communities can feel more secure,” Becerra wrote in a statement after Brown released his revision. “As we continue our work of enforcing California law and promoting public safety, we know that we must evolve with the times— 21st-century forensic tools are necessary to combat 21st-century crimes. These budget resources will support crucial forensic tools that help stop cybercrime, improve DNA identification and prevent human trafficking. Today’s budget will help the hardworking men and women at the Department of Justice as they work to make our communities safer, but there is always more we can do. I look forward to working with the Legislature and Governor Brown to ensure the Department of Justice can do even more to promote public safety, enforce California’s laws and defend the State’s interests against federal overreach.”
However, Beth Miller, a spokesperson for Californians Against Higher Taxes, expressed concern about the number of bills and amendments lawmakers have recently introduced.
“While the governor’s budget reflects a state on strong financial footing, the dozens of measures currently making their way through the Legislature tell a different story,” Miller said. “Despite a multi-billion-dollar surplus, legislators have introduced more than 30 bills and constitutional amendments that would add an additional $269 billion in new or increased fees and taxes. Hard-working taxpayers shouldn’t have to endure a 140-percent tax increase to pay for lawmakers’ pet projects. Now is the time to focus on prudent spending in order to boost economic activity and improve an overly burdened business climate in the state, not focus on creating new and higher taxes that will undermine the foundation of the fifth-largest economy in the world.”
One local Republican legislator, Assemblyman Matthew Harper of Huntington Beach, commended Brown’s revised budget but emphasized that the State must do more to protect residents.
“The governor’s proposal offers some protection from the next economic downturn, but more funding is needed for programs that will protect Californians,” Harper wrote in a statement last week. “I join with my fellow Assembly Republicans in asking to provide funds to the Armed & Prohibited Persons System— a program to get guns out of the hands of criminals. I am also seeking funds to hire more school psychologists to prevent violence in our schools and to give law enforcement the tools they need to go after dangerous criminals, as well as human traffickers.”
Education
The new budget proposal boosts K-12 school funding by about $4,600 per student compared to 2011-12 levels, and the State will fully implement the Local Control Funding Formula, correcting historical inequities in school-district funding, and permanently increase the minimum per-pupil funding that school districts receive to help offset rising costs.
The May revision sustains the 3-percent increase in funding for higher education that the January budget proposed, while continuing to keep tuition levels consistent in both the University of California and California State University systems. Since the Great Recession ended, the UC system has received $1.2 billion in new funding, the California State University system has received $1.6 billion and community colleges have received $2.4 billion, according to state officials. The revision also gives each university system $100 million in new, one-time funding for deferred maintenance. It also refines the state’s California Online College plan and the new funding formula for community colleges.
Assemblymember Patrick O’Donnell (D—Long Beach), who serves as chair of the Assembly Education Committee, said he appreciates and applauds Brown’s commitment to preparing the state for future dips in the economy, adding that he shares the governor’s perspective that California must live within its means.
“We have a significant budget surplus, and we are in a position to pay down long-term debt and put California in a more fiscally responsible place,” O’Donnell said. “The governor’s revised budget proposal is cautious and holds on to the majority of our surplus. A reserve is responsible, but paying off debt is both responsible and strategic.”
O’Donnell added that, as a parent, teacher and Education Committee chair, he strongly supports increased funding for education because investing in students means investing in the future of California.
“I applaud the governor for understanding the importance of K-12 vocational ed/career technical education, and I look forward to further discussion on how the funds will be allocated,” O’Donnell said. “These programs not only reduce drop-out rates, but they also strengthen the California workforce and economy in the long term. I look forward to a collaborative effort with my colleagues in the Legislature to develop a responsible budget that prioritizes education and pays down debt.”
Long Beach State University President Jane Close Conoley said that, by providing $100 million in one-time funding for deferred maintenance for California State University, Brown is taking a positive step forward.
“The building maintenance backlog at Long Beach State University alone, however, is in excess of $318 million,” Conoley said. “Every additional dollar would be put to good use. Safe, updated and learning-centered classroom and laboratories contribute to student success.”
She added that, while she appreciates the governor’s sense of frugality as it relates to funding state operations, fully funding public higher education and stabilizing the state’s fiscal condition should not be viewed as mutually exclusive.
“Research shows us our state’s economic outlook and social well-being are both enhanced when more people complete college,” Conoley said. “Long Beach State University consistently ranks in the top 20 U.S. colleges and universities that provide upward social mobility. Our graduates are earning higher wages than others in the nation. This is very good for California.”
She said that, in the coming weeks, she will be working closely with area lawmakers, encouraging them to augment the governor’s revised 2018-19 budget to provide opportunities for even more Californians to move up the socioeconomic ladder.
“The demand for higher education in California continues to outpace our ability to supply access and timely degrees,” she said. “Long Beach State University received more than 102,000 applications. We will be funded to admit about 9,000 students, meaning thousands of qualified students will be turned away from our campus. Turning away students who are motivated to be their best selves hurts the economic and civic futures of California.”
Homelessness
With $359 million dedicated to assisting homeless individuals, the State will assist local governments in immediately addressing homelessness across the state, bridging the gap until new funding flows from new housing measures that Brown signed last year.
Second District L.A. County Supervisor Mark Ridley-Thomas applauded Brown’s commitment to helping those experiencing homelessness but also expressed that a more long-term solution is needed.
“With California now accounting for a quarter of the nation’s homeless population, I’m glad to see that Governor Jerry Brown is ready to confront this crisis,” Ridley-Thomas said. “But while one-time funding from this budget is welcome, we need dedicated ongoing state funding to address the crisis of homelessness in a comprehensive manner.”
Poverty
The May revision also builds on the State’s commitment, since 2012, to contribute approximately $21 billion in new annual funding to maintain a substantial “safety net” for those in greatest need by expanding the Earned Income Tax Credit program to workers between the ages of 18 and 25 and above 64. It also adjusts income limits to account for the minimum-wage increase to $12 per hour next year.
The new budget also continues providing billions of dollars to cover the expansion of healthcare coverage, the restoration of low-income health benefits eliminated during the recession, the repeal of the maximum family grant rule in CalWORKs and increases in childcare and early-education provider rates and the number of children served.
Infrastructure
The May revision contributes $2 billion to infrastructure needs, since the State has significant liabilities from years of deferred maintenance. The funds will be used for universities, courts, state facilities and flood control.
Mental health
The State will provide $312 million in funding for programs that help Californians with mental illness, including training for mental-health professionals and early identification of mental-health issues. This allotment includes $254 million to help counties serve youth with mental illnesses.
The new budget also proposes to place the $2-billion “No Place Like Home” bond on the November ballot to expand housing opportunities for those with mental illness.
Climate change
The revised budget proposes $96 million, which includes additional auction proceeds and other funds, to implement the Forest Carbon Plan and take other measures to protect the state’s forests against the increasing threat of wildfires. The funds come in addition to $160 million proposed in January’s cap-and-trade expenditure plan to support forest improvements and fire protection.
