By Katy Murphy and John Woolfolk
SACRAMENTO — Gov. Jerry Brown urged caution Friday as he unveiled a $137.6 billion revised state budget proposal that boosts education funding to an all-time high and directs some surplus toward homelessness, mental health and infrastructure while fully funding a “Rainy Day” reserve.
Specifically, the budget provides $359 million from surpluss funds to help local governments grappling with homelessness, bridging a gap until new funding flows from new housing measures signed by the governor last year.
Flanked by charts for what will be his last budget before leaving office, Brown repeatedly cautioned about the need to save much of a surplus that has grown to $8.8 billion for what he said will be an inevitable economic slump that will cause state revenues to tank.
“Were nearing the longest economic recovery in modern history, and as Isaac Newton observed: What goes up must come down,” Brown said. “This is a time to save for our future, not to make pricey promises we cant keep. I said it before and Ill say it again: Lets not blow it now.”
The debate consuming the Capitol today — what to do with the $8.8 billion extra cash — is a marked departure from the dilemma facing the governor when he returned to office in 2011 with a $27 billion budget deficit. But Brown, who won voter approval to raise sales and income taxes after taking office, crafted his latest spending proposal with the next economic downturn in mind. It calls for saving much of the windfall to buffer the state when the economy slumps.
Melissa Melendez (R-Lake Elsinore), and Assembly Budget Committee member, said in a statement about the proposed revised budget that while Republicans support setting aside funds for a rainy day, they take issue with the idea there is a budget surplus.
“Im hard-pressed to accept the conventional wisdom that California has a budget surplus of a few billion when the state is staring down more than $200 billion in outstanding debt and liabilities,” Melendez said. “Despite the governors reputation as a fiscal conservative, this budget puts us on track to spend $5.9 billion more than last year. Since his first budget in 2011, state government spending is up by more than $46 billion.”
She called for freezing public university tuition, spending more on public safety and deferred infrastructure repairs and providing tax relief to all Californians.
Voters in 2014 created a “Rainy Day Fund” to save money and bolster state revenues for an economic downturn. The revised budget maintains the commitment to fully fill that fund, which will have a total balance of $9.4 billion by the end of the current fiscal year, growing to $13.8 billion by the end of 2018-19. Additionally, the budget proposes to direct an extra $3.2 billion into the states traditional budget reserve fund.
“Revenues have grown since January, but so have expenditures,” Brown said, noting that “the longest economic recovery ever was 10 years and were getting very close to that.”
Browns budget plan, which kicks off weeks of frenzied negotiations, is hardly the final word. Lawmakers moved by the states other pressing challenges — cities grappling with homelessness, strained public university systems, fire-ravaged swaths of the state, and working parents without access to affordable child care — are making the case for other priorities.
Pending proposals from lawmakers include an infusion of resources for the states health care system; emergency funding to cities and counties overwhelmed by the homelessness crisis; and far more support than the governor proposed in January for child care programs and the University of California and California State University systems.
And after the deadliest fire season in Californias history, North Bay lawmakers and fire chiefs on Wednesday held a news conference outside the Capitol calling for $184 million in firefighting aid. “California needs to make a commitment to a modern mutual aid response system to meet the changing threat we face,” said Brian Rice, president of California Professional Firefighters.
For education, the governors office noted that school spending, which sank to $47.3 billion in 2011-12 at the depth of the last economic downturn, is expected to reach $78.4 billion in2018-19, an increase of $31 billion, or 66 percent, in seven years. That comes to about $4,600 more per student compared to 2011-12 levels.
The revised budget maintains the 3 percent increase in funding for higher education proposed in January without the need to raise tuition at both the University of California and California State University systems.
Since the end of the last downturn, 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, Browns office said. The revised budget also provides each university system with $100 million in new, one-time funding for deferred maintenance.
With the budget surplus, the proposed budget will maintain commitments to increase funding for Medi-Cal, Cal Grants, child care, In-Home Supportive Services and foster care reform, among other programs. Most of the remaining funding will go toward one-time expenditures in infrastructure, fighting homelessness and mental health services.
The revised budget proposal calls for $2 billion for deferred maintenance for universities, courts, state facilities and flood control. It provides $312 million for programs that help people with mental illness, including training for mental health professionals and early identification of mental health problems. This includes $254 million to help counties serve youth with mental illness.
“Weve got some big money on the health care side,” Brown said.
On Thursday, Brown issued an executive order to prevent wildfires by improving forest health, actively managing more land and other measures. He wrote that his new budget would include an additional $96 million for wildfire prevention, on top of $160 million in proceeds from the states cap-and-trade climate program that he had proposed in January.
As firefighters stood somberly on one side of the Capitol for a news conference, hundreds of mothers and children demanding more funding for affordable child care programs rallied on the other side. One held a sign that read “Unlock the Rainy Day Fund,” referencing a savings account which the governor has proposed to fully fund at $13.5 billion. The Legislative Womens Caucus is pushing for an additional $770 million investment to raise the rate for providers and expand the number of available spots.
Browns office noted shortly before releasing the budget that although “a lot has changed” since his first, $9 billion budget proposal 43 years ago, “the guiding principals in todays revision havent.”
It quoted Brown describing that 1975-76 “no-nonsense” budget:
“Within these principles — of balance, need and scrutiny — I have tried to write a budget that responds to Californias future.”
Meanwhile, some moderate Democratic lawmakers — calling themselves the New Democrats — have introduced a bill that would help the state save even more of its surplus, using an optional, flexible savings account “to weather the states boom-and-bust revenue cycle.”
Lawmakers have until June 15 to pass the budget or have their paychecks withheld. The five weeks leading up to that deadline are sure to be dominated by debate over how to spend the surplus. The bills then go to Brown, who has the authority to veto individual spending measures within the plan.
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