Gov. Jerry Brown, charting a cautious course in his State of the State address, warned Thursday of a future economic downturn and urged lawmakers to restrain spending despite state budget surpluses.
Brown took credit for raising the minimum wage, expanding health care coverage and increasing funding for schools. But he pointedly offered no new policy proposals, casting an agenda focused on “how we pay for the commitments we already have.”
The address came amid turmoil in the United States stock market, with fears about the Chinese economy and the plummeting price of oil.
Brown depicted the world as “profoundly uncertain” and California’s budget, which relies heavily on income tax revenue, as especially volatile.
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“If we are to minimize the zigzag of spend, cut, spend that this tax system inevitably produces,” he said, “we must build a very large reserve.”
The annual speech opens a pivotal year for Brown, before focus shifts to the 2018 election to succeed him. The fourth-term Democrat enters the second year of his final term with relatively high public approval ratings and about $24 million in his campaign war chest, money that will allow him to factor heavily in ballot measure campaigns in November.
Brown, 77, gave no indication of how he might insert himself into those campaigns, only joking that he could fund a ballot initiative to change term limits to allow him to seek a fifth term.
His focus on the budget was so singular that Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California, said, “It looks like somebody switched his budget address with his State of the State text.
“What Brown learned over his years, in between administrations, is the importance of focus,” Schnur said. “He has a very small number of very important goals that he wants to accomplish, and rather than presenting a laundry list of 1,000 different things, he focused almost completely on what he wants the Legislature to do this year, which is to restrain itself.”
Brown has taken criticism in recent years for the unevenness of California’s economic recovery, with the state’s poverty rate the highest in the nation when adjusted for the cost of living. He insisted Thursday that he has enacted laws and programs to help the poorest Californians, while depicting income inequality as the result of globalization and other forces beyond the state’s control.
In his 20-minute speech, Brown resisted calls by legislative Democrats to spend more. Faulting the state for setting aside only a “token” amount to pay for billions of dollars in pensions and future retiree health benefits, Brown said it is a “moral obligation” to address that liability before making new commitments.
The speech served to underscore ongoing tension between Brown and more liberal Democrats about how much to spend on social service programs. Brown and the Democratic-controlled Legislature are in the opening rounds of this year’s budget talks.
While praising Brown for his “very clear-eyed focus on maintaining California’s fiscal stability,” Senate President Pro Tem Kevin de León said, “We also believe that we need to make much-needed targeted investments in human capital for those who have been left behind with the resurgence of the economy.”
The Los Angeles Democrat said, “We’ve got to make certain investments in the long run that will lift people out of poverty so they can become income earners and contribute to the state coffers.”
Assembly Speaker Toni Atkins, D-San Diego, noted that Brown “typically emphasizes austerity.”
“The Assembly’s responsible approach to budgeting,” she said, “allows us to consider posterity, too.”
In his State of the State address last year, Brown announced an initiative to reduce petroleum use in motor vehicles by as much as 50 percent within 15 years and to increase to one-half from one-third the proportion of electricity California derives from renewable sources. Brown and the Legislature enacted the renewable electricity mandate, but legislation to require petroleum reductions failed amid intense opposition from oil interests and moderate Democrats in the Assembly.
Brown, a longtime champion of environmental causes, said little about climate change or two major infrastructure projects he is laboring to push forward: California’s $68 billion high-speed rail system and a $15.5 billion plan to divert water around the Delta to the south.
Brown’s office pointed reporters to a new promotional video for the Delta project, while Brown renewed his call for a multibillion-dollar mix of taxes, fees and other revenue to fund road repairs throughout the state.
“Ideology and politics stand in the way,” he said, “but one way or another the roads must be fixed.”
Increasing taxes would require at least some Republican support, and GOP lawmakers have proved resistant.
Senate Republican leader Jean Fuller of Bakersfield said that in a year in which California enjoys unprecedented revenue, “it seems a little premature to fix the newest problems with new taxes.”
The state’s financial condition has rebounded since Brown took office and confronted a staggering budget deficit in 2011. Amid economic recovery, Brown this month issued a $170.6 billion state spending plan that includes billions of dollars in new funding for schools while rejecting calls for more robust, permanent spending increases in social service programs.
“A slowdown in China or turmoil in Iraq or Syria or virtually anywhere can send the stock market reeling and put California jobs and state revenues in jeopardy,” Brown said.
Barbara O’Connor, a political analyst and retired communications professor at Sacramento State, said that message is salient for Californians who are “looking at their 401(k)s this week, and they’re going … what happened?”
She said, “He has the right messages, he frames the issues correctly, and that’s why he’s the most popular politician in California.”
Brown, who oversaw dramatic service reductions when he took office, complained that without sufficient reserves, previous deficits required painful cuts to schools, child care services, courts and other programs.
He said, “I don’t want to make those mistakes again.”