June 14, 2017: BAY AREA NEWS GROUP - More money for schools, state pension fund, low-wage workers
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By Katy Murphy
SACRAMENTO >> A $125 billion funding agreement reached between Gov. Jerry Brown and top lawmakers ramps up spending for the coming year by $1 billion, while including tough reforms for an embattled tax agency and the central office of the prestigious University of California.
Brown called the agreement “balanced and progressive,” while Senate Leader Kevin de León framed it as an example of California’s leaders protecting its residents from the Trump administration.
“This state budget will keep California strong, protect our fiscal stability and empower our communities at a time when Washington is determined to undermine them,” de León wrote.
The budget deal, which lawmakers have until midnight Thursday to approve, would:
Increase spending on K-12 schools and community colleges by $3.2 billion.
Shore up the state’s reserve fund by $1.8 billion.
Expand a state tax credit program to include up to a million more low-wage workers.
Directly fund the University of California’s central administration, giving the Legislature a much greater degree of control over the Office of the President’s budget after a state audit this spring concluded that the president’s office had accumulated $175 million in “undisclosed” funds.
Save the Middle Class Scholarship, a tuition discount for middle-income students that the governor had proposed cutting.
Spend $111 million on dam safety evaluations and require development of emergency action plans and flood maps.
Senator Mike McGuire is pleased that many of the critical issues he fought for that will benefit Northern California have been included in the state’s budget.
“We have always said that we will fight hard for Northern California to get their fair share when it comes to state resources, this budget reflects that top priority,” McGuire said. “Local students will benefit from the largest boost in education funding in California history, we’re investing in medical and dental services that will expand programs for the most vulnerable, nearly $3 billion for our crumbling roads will be put to work and our rainy day fund remains strong at $8.5 billion.”
Assemblyman Jay Obernolte, a Republican from Hesperia who served on the joint budget committee, said he was glad to see that the proposed increase in spending didn’t outpace inflation as it has in the past — and that schools will be receiving more money. “From a macroeconomic standpoint, it’s actually a responsible budget,” he said.
Still, he said, the Legislature should be doing even more. “It’s very clear that the storm clouds are on the horizon,” he said, “and we might look back at this moment and regret we did not do more to prepare ourselves.”
One point of contention between the governor and the Legislature was how to spend the more than $1 billion the state expects to generate from its new tobacco tax that voters approved in November, Proposition 56.
Brown proposed using the money to offset increases in the Medi-Cal program, which infuriated providers and legislators on both sides of the aisle who said the tax was supposed to help expand access to health care — chiefly, by bringing up reimbursement rates so that more doctors would accept patients on Medi-Cal. Legislators insisted on using at least some of the new tax dollars to raise the rates.
The compromise, hashed out in a separate funding bill: $465 million of the money would go to raising reimbursement rates for Medi-Cal doctors and dentists.
“We’ve come a long way in the negotiations,” said Sen. Holly Mitchell, D-Los Angeles, at a news conference Tuesday. Mitchell, along with Assemblyman Phil Ting, D-San Francisco, led the budget-writing committee representing both chambers. She later added, “It’s the best deal we could come to agreement on.
Now, lawmakers in both houses consider the main budget bill along with a flurry of related legislation, covering everything from cannabis regulation to management of the state’s pension fund.
A news release from Brown’s office also makes reference to a $6 billion loan he has sought from the state’s Surplus Money Investment Fund to make additional payments into the California Public Employees’ Retirement System — a move he says will save the state $11 billion over the next two decades. Brown included the item as part of the budget deal, though as of Tuesday morning, some of the details were still pending and had yet been put into print, Senate staff said at a news conference.
A related bill introduced as part of the budget package also would overhaul the troubled tax agency, the Board of Equalization, by stripping it of powers and creating a new entity whose director reports to the governor. A recent audit conducted by the Department of Finance found that the board’s elected members interfered with the agency’s daily operations, routinely redirecting employees to work on their own projects — among other problems.
“Something had to be done,” said Sen. Richard Roth, D-Riverside.
The budget deal does not, however, include an extension of California’s signature program for the regulation of climate-warming greenhouse gases known as cap and trade, which is set to expire in 2020. Brown had asked the Legislature to approve the extension of the program as part of budget negotiations, but pending proposals from each house have not advanced. One measure, by Assemblywoman Cristina Garcia, didn’t receive even a simple-majority vote in the Assembly last month.
Brown referenced this missing item in his otherwise glowing statement about the agreement.
“We’ve come together on this balanced and progressive budget,” he said, “and I’m confident that we can do the same to extend our critical cap-and-trade program.”