Gov. Jerry Brown and Democratic legislative leaders struck a $200 billion budget deal on Friday that rejected two proposals that would have expanded access to health care and tax breaks to undocumented Californians.
The budget sets aside enough money in reserves to fill the so-called Rainy Day Fund with a sum equivalent to 10 percent of general fund spending, almost $14 billion. It places another $2.2 billion in contingency funds for other unexpected emergencies, and creates two new reserve accounts that might provide flexibility in downturn.
That gives the state about $16 billion in total reserves, enough to weather a mild recession without severe cuts to government services, according to the Legislative Analyst's Office.
Brown in a news release crowed about the reserves, noting the turnaround in the state’s fortunes since he took office during a severe recession.
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"After detailed discussions, California is on the verge of having another on-time, balanced budget,” he said. “From a $27 billion deficit in 2011, the state now enjoys a healthy surplus and a solid Rainy Day Fund."
One of the two proposals aimed at helping low-income, undocumented residents that did not make the cut would have offered Medi-Cal coverage to undocumented young adults and seniors. Earlier this year, legislative Democrats wanted to open the program to all undocumented residents at a cost of more than $1 billion a year.
Brown and lawmakers also rejected an Assembly proposal that would have allowed undocumented residents to receive the state Earned Income Tax Credit. The credit is available to households earning less than $22,309 in adjusted gross income.
The agreement puts the Legislature on track to meet its deadline to pass a budget by June 15.
"California's finances are on rock-solid ground," Senate President Pro Tem Toni Atkins, D-San Diego, wrote on Twitter. "Our budget is the strongest in a generation. It balances fiscal responsibility with social responsibility by investing in our people and guarding against the next downturn."
Brown’s office projected an $8.8 billion surplus for the state budget year that begins July 1. The Legislative Analyst's Office anticipates an ever larger surplus, projecting an additional $2.6 billion in revenue. The budget agreement adopts Brown's projection.
California's general fund is considered volatile – it can plunge by 20 percent in a recession – because revenue is heavily dependent on income taxes and capital gains. The reserves are intended to help the state avoid extreme cuts to government services in a recession.
Brown wanted to put almost all of the surplus into reserves and some one-time spending projects, such as refurbishing prisons, setting aside $100 million to build a California Indian Heritage Center in West Sacramento and seeding a new online community college program.
Democratic lawmakers also wanted to fill the reserves, but they also sought additional money for several programs, such as finding more money for the University of California and California State University, setting aside more money than Brown for efforts aimed at lifting people out of homelessness, expanding access to health care programs and providing more money to welfare programs for low-income Californians.
The compromise provides:
- $500 million in grants for programs designed to help communities address homelessness. That's $250 million more than Brown offered in his budget, but about half of Assembly leaders and mayors of California's largest cities wanted.
Sacramento Mayor Darrell Steinberg, who advocated for the grants, celebrated the increase in funding from Brown's earlier proposal.
"It is fundamentally what we asked for, which is a flexible pot of resources to deal with that bridge of getting people off the riverbed and the streets and into permanent housing," he said.
- A significant boost in funding for California's four-year universities. The California State University will receive an additional $105 million in ongoing funding above Brown's budget proposal, and another $167 million for one-time expenses. The University of California gets another $177 million for one-time expenses. The budget includes $2.8 million to help UC Davis plan for its Aggie Square project, which would bring new programs to Oak Park.
"This investment will enable the CSU to enroll more students from a wide variety of backgrounds, and prepare them to improve their communities and lead the industries that are driving California. This is vital to our state’s future," CSU Chancellor Timothy White said.
- $90 million up front for the fourth quarter of the upcoming budget year and $360 million in ongoing funding toward raising welfare grants distributed through the CalWORKS program. State Sen. Holly Mitchell, D-Los Angeles, has advocated an increase in funding to lift low-income families out of deep poverty.
- $5 million to create a universal health care task force. The budget compromise generally avoids other new long-term health care commitments, rejecting Assembly-favored proposals that would have expanded Medi-Cal access to some undocumented immigrants.
Health care advocates were frustrated that the budget did not include more money to reduce the cost of the health insurance premiums or expend access to Medi-Cal.
"It is deeply disappointing that this budget takes no new steps toward Californians getting coverage and care," said Anthony Wright, executive director of Health Access California.
- $60 million to create a database tracking the cost of health care claims.
- $10 million to promote the state's Earned Income Tax Credit and additional money to expand eligibility for it to young workers and to senior citizens.
- $90 million to reach out to residents ahead of the 2020 Census. That's $50 million more than Brown initially requested.