SACRAMENTO — Gov. Jerry Brown warned stakeholders not to get giddy over increased revenues as he released his 2016-17 budget proposal, a plan that calls for shoring up California’s rainy day fund and increasing education spending.
Brown cautioned that another recession is inevitable and when it happens, the state’s tax revenues could drop $55 billion as capital gains plummet.
“It must never be forgotten that 69.5 percent of our general fund revenues come from the volatile personal income tax which, as history shows us, drops precipitously in time of recession,” Brown said in a statement included in the budget proposal’s introduction.
Brown’s proposal increases the state’s general fund to $122.6 billion and brings the rainy day fund to $8 billion at the end of the budget year.
Gov. Jerry Brown’s budget for the 2016-17 fiscal year at a glance:
Gov. Jerry Brown proposed spending more than $270 million on improving the performance of California’s workforce training programs in his proposed budget yesterday, providing a boost to the California Economic Summit’s efforts to strengthen regional workforce pipelines—and better connect training programs with the needs of employers.
The UC & CSU systems would each receive the increases they were expecting as part of longer-term budget planning — about $125 million more in general-fund money for UC and $148 million more for CSU. In addition, UC would get $171 million from the state’s rainy day fund to pay down its pension debt. Community colleges would get money to expand enrollment by some 50,000 students, a 2 percent increase, as well as for improving remedial education. All three segments would get one-time money to spend on maintenance that was neglected in leaner years. Undergraduate tuition is expected to remain flat again this fall.
Public schools would receive nearly $72 billion next year under the state’s minimum-funding guarantee, a whopping 51 percent increase since the depths of the state budget crisis in 2011-12. Including federal and local sources of revenue, the total amount of money spent per student would average $14,550, up $366 from the current year. But the governor did not have high praise for a $9 billion construction bond measure slated for the November ballot, saying the state’s existing facilities program is overly complex and needs reform. He urged the Legislature to take action.
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The environmental centerpiece of Brown’s budget is his plan to spend $3.1 billion from fees collected on big polluters under the state’s cap-and-trade program to curb greenhouse gas emissions. Brown proposed spending $500 million of that money on his controversial high-speed rail plan; another $500 million for low-carbon fuel programs, such as rebates for people who buy electric cars, hybrid trucks and zero½’emission trucks and buses; $400 million for urban rail programs; and $150 million to remove and replace many of the 22 million trees across the Sierra and other rural parts of California that have died during the drought. Other programs he proposed funding from cap-and-trade fees would boost renewable energy, restore wetlands and pay for energy efficiency and weatherization of state buildings. California’s four-year drought also received attention. The governor unveiled a plan to spend $323 million on drought relief. Among the priorities: spending $77 million for beefing up firefighting crews and equipment, $42 million for building rock barriers in the Delta to limit encroachment of salinity into water supplies, $30 million to fund rebates for people who buy water-efficient toilets and appliances and $26 million to assist unemployed farmworkers with food aid and other relief. “The world is expensive, and drought and climate change are part of the future,” Brown said, “so I wouldn’t be surprised if those costs continue to rise.” He also proposed spending $100 million in bond funding to shore up Delta levees and $60 million to pay down deferred maintenance at state parks, such as repaving roads, fixing roofs and modernizing campgrounds.
The California courts, battered for years by budget cuts that forced some local court systems to even cut hours and close courthouses, got a dose of much better news in the governor’s latest budget. The $3.8 billion court budget boosts spending by at least $146 million; it’s hundreds of millions of dollars above the darkest days for the judiciary four years ago, when widespread cuts hit the system. The spending increase includes $30 million for trial courts to experiment with new ways to handle legal matters more efficiently, an emphasis of the governor in recent years. Chief Justice Tani Cantil-Sakauye praised the spending plan for the courts. “The proposed budget reflects a steady but cautious new investment in the judicial branch,” she said.
The governor’s budget calls for $36 billion for state freeways, local streets and transit, nearly half — $16.2 billion — earmarked for filling potholes and maintaining its 500 miles of highways and 340,000 miles of local roads. The registration for all vehicles would jump $65, including hybrids and electric cars. The state gas tax would be adjusted for inflation and diesel tax increased 11 cents a gallon with inflation adjustments.
The governor outlined his proposed budget commitments to the poor in California through more tax breaks, higher wages and cost-of-living increases for disadvantaged residents who rely on public benefits. Specifically, Brown called for an additional $400 million for the Earned Income Tax Credit, a cost-of-living increase in payments to the elderly, blind and disabled; $250 million for a minimum-wage increase to $10 per hour, and $450 million to provide an income supplement for in-home health workers who work overtime. The governor is also proposing more than $60 million in general funds for social service, child welfare, and probation agencies to create alternatives to group home care for foster youth. The funds, coupled with millions more from the federal government, would expand opportunities for kids in facilities to be placed in homes with families, and ensure they receive necessary mental health services, regardless of their placement.
Health care advocates had hoped the projected budget surplus meant there was enough to restore cuts made in the depths of the recession, including those to public health programs, Medi-Cal health benefits and Medi-Cal provider reimbursement fees. But as they have come to learn, Brown is reluctant to include any additional investments or restorations in his budgets. Instead, Brown’s focus is making sure the state can make a deal with health insurance companies to update and renew a $1.1 billion a managed care organization tax — which helps fund Medi-Cal. Even if a deal is reached, however, it must be signed off by two-thirds of the Legislature. And it is Medi-Cal funding that continues to be his — and the state’s — focus, requiring a projected $19.1 billion of the health and human services’ $34 billion general fund budget in 2016-17. The state has added at least 4 million enrollees to its Medi-Cal ranks, for a total of 12.6 million — about a third of the California’s population. Part of the hike in numbers is related to a provision in the Affordable Care Act that expanded eligibility health care program for the poor to adults without children. And while Brown last year agreed to increase Medi-Cal funding for about 170,000 undocumented children — projected to cost $40 million in the first year, and $132 million annually thereafter — he noted that the cost associated with efforts to expand that pool to undocumented adults would be a hard sell for him.