Dan Walters

Dan Walters: Gov. Jerry Brown, Democrats duel over budget

Two analyses of the pending California state budget frame a looming conflict with just days remaining before the June 15 deadline for passage.

The first came from Moody's, a major credit rating organization, after the Legislature's budget analyst, Mac Taylor, suggested that the state may have $3.2 billion more to spend in the 2013-14 fiscal year than Gov. Jerry Brown had forecast.

"In prior years, the state has frequently used overly optimistic revenue projections in its budget, resulting in mid-year budgetary shortfalls that needed to be solved using triggered spending cuts or mid-year legislated spending cuts," Moody's said.

"Using the governor's fairly conservative revenue forecast would increase the likelihood of meeting those forecasts and maintaining the $1 billion reserve factored into the budget proposal. The LAO's higher revenue forecast, if used by the legislature in its budgetary decisions, adds more risk that the forecasts will not be met."

Moody's admonition to the Legislature to budget conservatively was countered in the second analysis from the California Welfare Rights Organization, which chided Brown for "failing to address child poverty ravishing California" and claimed that over the last 15 years, state budgets have forced welfare recipients to make $17.3 billion in "involuntary contributions" to the state's general fund through benefit cuts, including $2 billion in Brown's latest budget.

There it is. Brown wants to keep the lid on health and welfare benefits, but Democratic legislative leaders have embraced Taylor's higher revenue projection and want to restore some "safety net" services.

Two years ago, as he began his second governorship, Brown not only increased safety net reductions, but said he wanted to make them permanent in an overall retrenchment.

This year, with the state receiving billions of dollars in new revenue from temporary new sales and income taxes and an improving economy, Brown declared that all of the extra money would have to go to schools, the single most popular form of government spending.

About three-quarters of the extra money that Taylor predicts also would have to go to schools under state law, but Democratic legislators want to tap the other quarter, perhaps $800 million, to bolster health and welfare services.

Is Brown being ultra-conservative on the revenue side of the ledger? So it would appear, but as Moody's warns, the differing income numbers are guesses on how a few wealthy taxpayers fare in stocks and other capital markets.

Brown is clearly concerned that adopting a much higher number could be embarrassing if it fails to materialize and undercuts his hopes of putting the budget behind him and moving on to other items on his agenda.

Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters. Follow him on Twitter @WaltersBee.