Brown’s budget isn’t quite done

In the face of a fall in tax collections, Gov. Jerry Brown was properly cautious about holding the line when he released his revised state budget on Friday.

It’s a dirty job, this task of insisting on maintaining a rainy-day fund and managing California’s less than ideal system of taxation. But someone has to do it, and Brown deserves credit for handling that task well.

Because legislators can approve the $173 billion spending plan by a simple majority vote, Republicans largely are cut out of the budget process. There will, however, be a notable exception.

Brown’s new budget shows he is joining the Senate Democrats’ push for a $3 billion housing bond to help homeless people, many of them mentally ill, secure shelter. As part of that plan, the state would shift $2 billion from mental health programs funded by the Proposition 63 tax on wealthy Californians.

For that, the governor and Democrats would need Republican support. We urge adoption of the housing plan, so long as worthy programs for severely mentally ill people will not be shortchanged.

Brown’s revised budget makes note of several programs intended to help the working poor. More than 350,000 taxpayers received the new state earned-income tax credit, intended to put a few hundred bucks into their pockets. The minimum wage will increase by 50 cents to $10.50 in January, adding more than $39 million to state costs – and more to business costs.

The governor ought to take another step by joining legislators who have been pushing for more funding for child care for low-income women. Skimping on child care for poor women who seek to better themselves by working or taking classes is short-sighted and self-defeating.

As he has done repeatedly during his second stint as governor, Brown points to charts depicting budget deficits and promises to do what he can to avoid future shortfalls, knowing that downturns are inevitable.

However, Brown withheld judgment on a likely November initiative by public employee unions to extend for 12 years an extra income tax on the very wealthy. If voters fail to approve the tax, he noted, the next governor would face a deficit by 2018.

The governor held out the possibility that he would expend some effort in his final two years in office overhauling the tax system. He should. Republican legislators would need to engage. And Democrats rightly would be uninterested in reducing taxes for high earners if it means raising taxes on the vast middle.

But income taxes paid by the very wealthy account for half the state’s tax revenue. Rich people, in turn, receive much of their income from capital gains, which fluctuate. The volatility has been a problem. Too often, past governors and legislators have fallen to temptation by spending freely in good times, only to be forced to cut when the downturn comes.

This governor has aimed high in many areas and sought to correct problems created in earlier times. Confronting inequities in the tax system would not be simple, but it would be a worthy undertaking.

This story was originally published May 14, 2016 at 5:30 AM with the headline "Brown’s budget isn’t quite done."