One day after state lawmakers passed a budget that did not reflect agreement with Gov. Jerry Brown, legislative leaders on Tuesday abandoned significant parts of their proposal and announced a deal with the governor.
The accord includes slightly more spending on education and social service programs than Brown originally proposed – but significantly less than Democratic lawmakers sought.
In announcing the agreement, Brown said the deal preserves his general fund revenue forecast and overall spending levels, a major concession by legislative leaders to the fourth-term governor. Total general fund spending of $115.4 billion was only $61 million more than Brown originally proposed, not the $749 million more that legislative Democrats wanted. The total budget, including all funds, was set at $167.6 billion.
Brown also announced that he is calling two special sessions – one to address health care, the other to discuss funding road and other infrastructure repairs.
“This is a sound and well-thought-out budget,” Brown, joined by legislative leaders, said at a news conference at the Capitol.
Assembly Speaker Toni Atkins acknowledged that “we didn’t get everything we wanted accomplished in this budget.” Still, she said, “other than the budget the Assembly and Senate passed yesterday, this is the best budget that we have seen in years.”
Lawmakers passed a more expansive budget plan, taking action to meet a June 15 constitutional deadline to pass a budget or give up pay.
Their budget relied on more optimistic revenue projections. The Legislature’s projections – about $2.3 billion higher than Brown’s – were in line with estimates from the nonpartisan Legislative Analyst’s Office, but Brown cast his estimate as more prudent.
The agreement, he said, “is very close” to the May revision he proposed.
In a victory for legislative Democrats, Brown agreed to expand Medi-Cal coverage to undocumented children in California starting in May 2016. The cost, about $40 million in the 2015-16 budget year, will grow to about $132 million in future years. It expands on a proposal Brown made in May to spend $67 million for health and social service programs for immigrants covered by President Barack Obama’s November executive action shielding certain residents from deportation.
Senate President Pro Tem Kevin de León, D-Los Angeles, called expanding health care coverage to undocumented children “a historic accomplishment.”
“It’s both a powerful act of compassion and a prudent economic approach,” he said, because it invests in “preventative and primary care now instead of much more expensive health care later.”
The agreement includes $265 million to fund 7,000 additional preschool and 6,800 child care slots. Legislative Democrats were seeking about $409 million – including more than $260 million in general fund money – for a broader expansion of those programs.
Democrats had also proposed giving home child care providers the ability to unionize. The administration opposed the proposal, and it was not included in the agreement.
In other setbacks for legislative Democrats, the budget agreement did not include additional monthly grant funding for families that have another child while on welfare. Currently, such families are barred from receiving the extra money, roughly $130 a month, under a law passed in 1994.
“It is morally and ethically wrong that we haven’t done what we should as legislative leaders to pull children out of deep poverty,” said Sen. Holly Mitchell, D-Los Angeles, the author of the repeal effort.
“There is nothing in this budget that does that.”
Mike Herald, of the Western Center on Law and Poverty, said the blind, aged and disabled also fared poorly in the budget.
“We appreciate new child care slots, an (earned-income tax credit) for those that work and traffic amnesty for those with license suspensions,” Herald said. “But in a year in which the state is receiving enormous revenue increases it is unimaginable that the budget would provide so little for those who have the greatest needs.
“It is a tragic missed opportunity and raises the question if California will ever face up to the embarrassment of having the highest poverty rate in the country in the world’s seventh largest economy.”
Lawmakers could vote as early as this week on the budget package, well before the July 1 start of the 2015-16 budget year. They will still have work to do, however.
In calling a special session on roads and infrastructure, Brown said the state’s current fuel excise tax is insufficient, leaving billions of dollars in unfunded repairs annually.
“We have massive underfunding of our road maintenance program, and one way or another, we’re going to have to find some solutions,” Brown said.
Brown is seeking to address health care funding shortfalls in a special session, too, with a health plan tax expiring next year.
He said that “if we don’t find some substitute” for that tax, the state is “looking at a $1 billion hole next year.”
Legislative Democrats, who had sought to increase reimbursement rates for Medi-Cal providers through the budget process, said they will take the issue up in the special session.
Brown, asked if he would now be willing to sign tax increases without voter approval, said that is an “open question.”
“I ran for office when this state had a $27 billion deficit, and I said I wasn’t going to raise taxes unless the people said that’s what they wanted through an initiative, and I kept my promise,” Brown told reporters at a news conference on a budget deal at the Capitol. “But when I ran the second time I didn’t say that, and you didn’t ask me.”
In fact, Brown was asked before his re-election last year, but declined at the time to say if he would maintain the pledge he made in 2010.
Any transportation tax proposal is likely to face stiff resistance from Republicans in the Legislature.
“We have to do something; I think everyone agrees with that,” said Assemblywoman Melissa Melendez, R-Lake Elsinore. “The question is how do we get there.”
She said she is not prepared to vote for a new transportation tax and that “there’s great hesitancy, of course, on the part of many to vote for any type of tax increase or tax measure.”
However, she said, “we are going to have to come to some sort of compromise because the roads are not going to pay for themselves.”
In addition to special sessions on roads and health care funding, Brown and legislators have yet to resolve a dispute over how to spend hundreds of millions of dollars in cap-and-trade revenue, money polluters pay to offset carbon emissions.
The Senate’s Democratic leaders are seeking about $500 million more in cap-and-trade spending than Brown proposed in May, mostly for greenhouse gas reduction-related programs benefiting disadvantaged communities.
Brown and lawmakers agreed earlier this month to set the disagreement aside until after budget talks were finished, and it was not addressed in the deal Tuesday.
The dispute does not affect a majority of the fund, about $1.2 billion, set aside for high-speed rail, transit and other programs.
Highlights of the state budget deal Gov. Jerry Brown and legislative leaders have reached:
▪ $115.4 billion general fund is $61 million more than Brown proposed in May, not the $749 million more that legislative Democrats wanted.
▪ Special sessions on road building and health care could include tax increases if enough Republicans agree.
▪ UC agrees to two-year tuition freeze, pension overhaul; gets $25 million to enroll an extra 5,000 California residents.
▪ Spends $40 million so undocumented children can enroll in Medi-Cal.
▪ Adds 7,000 full-day preschool and 6,800 child care slots, fewer than Legislature sought.
▪ Rejects unionization of day care workers that Legislature sought.
▪ Establishes earned-income tax credit for working poor.
▪ Rejects extra money for families that have another child while on welfare.
▪ Puts $1.9 billion into rainy-day fund; balance at $3.5 billion.
▪ Spends $226 million to restore 7 percent reduction in hours for in-home health workers.