Capitol Alert

‘Cuts are coming,’ Jerry Brown says as he releases revised budget plan

Jerry Brown says a recession is inevitable

Gov. Jerry Brown on May 11, 2017 released his revised budget plan, noting that an economic downturn is coming.
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Gov. Jerry Brown on May 11, 2017 released his revised budget plan, noting that an economic downturn is coming.

California Gov. Jerry Brown released a revised, $180 billion budget proposal Thursday that closely mirrors his January plan, maintaining a cautious approach amid uncertainty about the direction of the economy and possible federal actions that could hurt the state’s bottom line.

Thursday’s revised plan follows disappointing revenue numbers for April, the state’s biggest tax filing month, but reflects a $2.5 billion uptick in estimated revenue through June 2018 compared to Brown’s January package. It puts $400 million into easing the burden on counties to pay for home-care services while pulling back on an earlier proposal to freeze child-care provider rates. It also links more money for the University of California to the system’s acting on recommendations in a scathing state audit.

Yet much uncertainty remains, Brown told reporters at the Capitol. The economy’s direction is unclear, and Republicans continue to pursue efforts to repeal the Affordable Care Act, change tax law and take other actions that could hit the state hard.

“The world of Washington is changing by the hour. It’s very hard to predict what they will do. But we’ve got to be wary and prudent,” Brown said, warning about the economy: “Make no doubt about it, cuts are coming in the next few years, and they’ll be big.”

Thursday’s release formally begins a month of negotiations with the Legislature to craft a final spending plan that must be approved by June 15.

The plan promises $50 million in additional state support for the University of California – but only if the system carries out the recommendations of the recent audit. “I put that $50 million in there so we can hold their feet to the fire,” Brown said.

The new plan also contains additional spending. It calls for allocating $400 million to counties in 2017-18 to help them pay their share of costs for home-care services for the old and disabled, easing the impact from the administration’s canceling of a program that sought to better coordinate health and social services for the poor.

Thursday’s package, though, includes few other major changes from the package Brown presented in January, shortly before Donald Trump’s inauguration put Republicans in full control of the federal government and seemingly within easy reach of repealing the Affordable Care Act and making other promised changes that would mean trouble for the state’s bottom line.

Since then, though, Trump’s agenda has bogged down. The House narrowly approved legislation this month to repeal Obamacare and revamp Medicaid, the federal-state health care program for the poor, with administration officials saying the plan would cost the state an estimated $6 billion in 2020, rising to $24 billion in 2027.

Brown tore into California House Republicans who voted for the health care bill.

“They weren’t sent to Congress just to take orders from that crowd of Donald Trump,” Brown said, suggesting they will do penance come next year. “I really don’t understand why those people, particularly in swing districts, are following the dictates of Donald Trump. I think they should think about their constituents, their families.”

The House legislation faces long odds in the Senate. Similarly, a Trump-led effort to overhaul federal tax laws, something that also could have major implications for California’s budget, hasn’t moved beyond a brief summary. A stopgap federal spending bill, meanwhile, passed Congress with bipartisan support and maintained existing federal funding for state programs.

Thursday’s plan includes $6.5 million more for the Department of Justice, and 31 positions, to handle more workload related to the legal challenges by the state to the federal government on sanctuary cities and other policies, effectively reversing a proposed cut in January’s plan. The proposal followed Attorney General Xavier Becerra’s request for more money during a Senate budget hearing last week.

“There are unique litigation expenses right now,” Brown said Thursday.

Yet the revised plan makes no changes in the January plan’s allocation of money from last year’s ballot measure raising tobacco taxes. Doctors and dentists have pressed to have $1.5 billion of the revenue be spent on raising Medi-Cal provider rates, but Brown’s plan rolls the revenue into maintaining Medi-Cal’s overall spending.

“There’s only a certain amount of money. If you don’t do what our budget does, then you have to find cuts in other parts of the program,” Brown said, saying his plan “is the least painful way to go.”

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