State budgets have been easy-peasy political exercises in recent years, thanks to hefty increases in revenue from an expanding economy.
Gov. Jerry Brown has annually proposed budgets he characterizes as “prudent,” meaning they don’t spend everything coming in and set aside a few billion dollars in rainy-day reserves.
The Legislature, dominated by fellow Democrats of somewhat more liberal leanings, tries to raise spending. Brown then gives a little ground to the pleaders, but also makes some symbolic line-item reductions, and that’s that.
This year may be different.
Brown’s annual warnings about an economic downturn are a little more animated because he sees revenue growth flattening out, and he’s tightened up even more on spending – even for K-12 schools, the largest and most popular segment of the budget. He wants schools, in effect, to give back money from previous budgets because revenues fell short of estimates on which appropriations were based.
Although his tighter-than-usual attitude on spending still would increase the overall budget slightly, legislators are clearly unhappy, as initial budget hearings, including one in the Assembly on Thursday, have shown.
Democrats want to spend more than Brown seeks not only on schools, but on health care for the poor – with one eye on what may happen in Washington vis-à-vis Obamacare – and on such high-dollar items as low-income housing and expanding early childhood education.
The latter is a particular interest of Assembly Speaker Anthony Rendon.
He was a professional in the field, and this week, underscored the issue by appointing a commission to “develop solutions.”
“Our successful future is built on a tiny foundation,” Rendon said. “Our youngest children are learning even before they start school, and that learning is the basis of their entire educational success. Their success is our success.”
Expanding early childhood services is also a high priority for public employee unions as K-12 enrollment continues to drift downward due to a falling birth rate.
Brown is clearly reluctant to make major commitments for such programs, warning that they become “entitlements” that are difficult to reduce when revenues decline.
A major factor in whether the budget conflict escalates into a toe-to-toe showdown is a multibillion-dollar disagreement on projected revenues.
While Brown’s Department of Finance sees flattening revenues that fall short of fully financing current services and programs, the Legislature’s budget analyst, Mac Taylor, sees revenues next year running $4 billion higher – more than enough money to placate the Legislature’s demands.
However, while the two sets of bean counters disagree on revenue, Taylor agrees with Brown that reserves need to be bolstered to hedge against an economic downturn, the uncertainty over what President Donald Trump and a Republican Congress will do on health care and other issues, and the state’s notorious volatility in income taxes, which are 70 percent of general revenue.