Brown 'resolute' on limiting new spending as revenue growth slows
When Gov. Jerry Brown unveiled a revised state budget a month ago, he warned fellow Democrats in the Legislature that he would be “very resolute” on holding down spending and building reserves to cushion a likely economic downturn.
He wasn’t kidding, as the final budget he negotiated with Democratic leaders demonstrates.
Brown gave them only a few, relatively cheap items on their multibillion-dollar wish list of expanded health, education and welfare services, such as lifting the ban on support payments for children conceived after their mothers began receiving welfare benefits.
Moreover, Brown made many of them one-time appropriations while enforcing a strict limit on long-term spending commitments.
One of those one-timers is $400 million for low-income housing, but it may never be spent. Brown is insisting that it be matched with regulatory streamlining for housing projects, and that has local governments, environmental groups and unions fuming.
As the budget negotiations began, the California Budget Center issued a 10-item list of priorities for liberal advocates and legislators. Only a few made it into the final deal, and in some cases they were partial and/or limited, such as the housing money.
Although their deal with Brown just skims the surface of the expansive agenda they had sought, the legislative leaders who made it, Assembly Speaker Anthony Rendon and Senate President Pro Tem Kevin de León, put on a happy face in their joint statement, terming it “both responsible and visionary.”
Brown was so tight that as a legislative conference committee rubber-stamped the new budget Thursday night, Republicans joined Democrats in complaining about some items that were left short, such as legal counsel to protect foster children’s rights and court funds.
Senate Budget Committee chairman Mark Leno and other liberals bemoaned that they were being forced to vote for details of a deal that they intensely disliked. Leno was particularly irked by Brown’s strings on the housing money.
The budget also leaves several major issues unresolved, such as Brown’s call for a multibillion-dollar, multiyear financing plan for highway and road rehabilitation, including new taxes of some kind, and spending from the state’s auctions of carbon emission allowances.
The highway plan has stalled for months because of disagreements on taxes and Department of Transportation reforms. The taxes would take a two-thirds legislative vote, which means at least a few Republicans would have to back it. Even if Democrats regain their two-thirds “supermajorities” in the Legislature this year, a highway deal would be difficult.
Brown submitted a $3.1 billion plan to spend carbon auction proceeds, but May’s quarterly auction generated just 2 percent of anticipated revenues, placing a cloud on the entire program. The plan, therefore, is postponed indefinitely.
Brown was, as he says, “resolute” because he believes, with good reason, that the state is overdue for recession. His Department of Finance has projected that even a relatively mild recession could drop revenues, which are highly dependent on taxing high-income Californians, by $55 billion over three years, or roughly 15 percent.
He insisted, successfully, on adding an extra $2 billion to the state’s “rainy day fund.” However, it maxes out at 10 percent of the general fund, or about $12 billion, so it would provide only a brief respite from recession.