Gov. Jerry Brown followed a familiar pattern Thursday when he proposed to use much of an unexpected windfall in state tax revenue to pay down debt and sock away money in a new rainy day fund.
But Brown, releasing his revised budget, also nodded to his Democratic allies in the Legislature by offering several proposals aimed at helping the least fortunate Californians share in the bounty of the state’s economic recovery.
While we might quibble with some of the details, on balance the governor seems to be charting a sensible course.
His intent, as it has been for years, is to steer the state back toward fiscal stability while building a cushion against the next economic downturn. As he said Thursday, another recession is coming. We just don’t know when.
Also coming, unless the voters intervene, is the expiration of tax increases Brown proposed and campaigned for in 2012. Brown has viewed that voter-approved tax as temporary.
One projection by Brown’s staff shows state spending outstripping revenue by $2 billion in 2019. That’s four years away, and a lot can and will change by then. But it’s still good reason for Brown and the Legislature to be cautious about how they spend the current surplus.
The governor’s top priorities for the new money include:
- A new state version of the federal Earned Income Tax Credit, which helps to offset payroll and other taxes for low-income people as they move from public assistance into the workforce. Brown’s proposal is narrower, less expensive and more targeted to low-wage workers than Democrats in the Legislature would like. But it might be a more realistic starting point that won’t bust the budget.
- Increased funding for the University of California and the California State University systems to help them hold tuition flat for the next two years.
- The provision of Medi-Cal health benefits to undocumented immigrants who are eligible for President Obama’s executive order granting them residence status.
The revised budget’s big winner will be K-12 education, which will be getting $6 billion more than was projected just two years ago for the coming fiscal year.
That would be $3,000 per student more than when Brown took office in 2011. And thanks to a new funding formula Brown pushed and the Legislature enacted, much of that new money will be focused on students from low-income families.
Progressives should support Brown’s call for prudence. Paying down debt frees up money in the budget that can be used for new programs in the future. And building a bigger reserve will help avoid cuts to programs when the economy sputters and revenue growth slows.
If the economy defies history and the boom continues unabated, there will be more money to spend later – and that’s not a bad problem for lawmakers to have.
After years of roller-coaster budgeting, Brown wants to put the state on a smoother track. That’s good for taxpayers, and, ultimately, it’s good for the people who rely on state services.