Gov. Jerry Brown’s January budget proposal is just around the corner, and it’s the event every lawmaker, lobbyist and chief financial officer in your life will be talking about over the holidays.
Walk away if “Test 2” or “triple flip” come up. Otherwise, here are some top budget issues to keep you at the punch bowl.
1. Will Brown loosen up?
Probably not. Brown is fiscally moderate, and every indication is that he will remain as restrained in his final term as he has been since taking office in 2011.
Yes, this is the first budget proposal Brown will make free of a likely future run for office. But he has other reasons – including a possible ballot measure in 2016 – not to blow through political capital.
Even if Brown was inclined to spend more next year, he is unlikely to telegraph that in his January budget plan. It is only the beginning of six months of negotiations, and the governor would likely seek concessions from the Legislature for any budget largess.
The most significant measure of Brown’s fiscal outlook will likely be answered in the budget’s top line. Brown’s revenue projections usually have been more cautious than those from legislative Democrats and the nonpartisan Legislative Analyst’s Office.
The LAO estimates California is in store for surpluses through the end of the decade. Brown, though, is likely to take a more bearish outlook; the question is by how much.
2. Funding health and social services
Last year, the Legislature passed a budget that gave Brown nearly everything he wanted, including a reserve account and money for the state’s $68 billion high-speed rail project.
Democratic lawmakers and health and welfare advocates secured some victories, too. Brown approved more money for Medi-Cal and welfare-to-work programs, as well as millions of dollars for new children’s programs, including additional preschool slots for poor children.
But California’s health and human services were cut by billions of dollars during the recession, and advocates and their Democratic allies fight each year to restore those services.
Brown is unlikely to propose enough money to satisfy those interests, but some funding increases are likely. The question is how much and where.
3. Brown v. Napolitano, Round 2
University of California President Janet Napolitano and the University of California’s governing board voted last month to raise tuition if Brown and lawmakers don’t give the university system more money.
The threat was a budget play, and Brown’s response is expected to come in his spending plan.
In previous budget documents, Brown conditioned modest annual funding increases for the UC on the system holding tuition flat. Though the two sides never made a formal pact preventing a tuition increase, Brown officials have accused the UC of breaking a deal.
Brown could offer the UC more money, or threaten to reduce funding if the UC raises tuition. Or he could hold fast to his original plan for a modest funding increase, hoping the UC blinks.
4. Retiree health care
Brown’s budget plan will include a proposal to reduce California’s nearly $72 billion in unfunded retiree health benefits, but it is unclear how. The Department of Finance said only that the budget would “address this unfunded liability – and sustain health benefits for retirees for the long term.”
One option? Proposition 2 …
5. Proposition 2
Voters approved the creation of a new budget reserve in November to sock away money for a fiscal rainy day and to pay down debt. Now, lawmakers have to carry it out.
But exactly how much money goes into the reserve, and what debts it pays for, depends on upcoming interpretations of the law’s finer points. Brown will spell out his point of view in January.
Call David Siders, Bee Capitol Bureau, (916) 321-1215. Follow him on Twitter @davidsiders.