Jan. 10, 2018: BAY AREA NEWS GROUP - Gov. Brown proposes $131.7 billion state budget

January 10, 2018

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SACRAMENTO — Four-term Gov. Jerry Brown released his 16th and final annual budget blueprint Wednesday, urging legislators to sock away most of the state’s projected $6.1 billion surplus as he warned of the next economic downturn and potential cuts by the Trump administration and the Republican-controlled Congress.

The $131.7 billion budget plan for 2018-19 would fill the state’s rainy day fund, which stockpiles funding for a possible future economic downturn, and increase funding for a program supporting low-income students.

The proposed budget — the starting point for five months of negotiations with the state Legislature — comes as the state is on track to end the 2018-19 fiscal year with one of the largest surpluses in the last decade.

But Brown characteristically urged caution, pointing out that previous recoveries from economic downturns haven’t lasted.

“We must remain vigilant and not let rosy statistics lull us into believing that economic downturns are a relic of the past,” Brown wrote in a message to legislators.

The budget would squirrel away a big chunk of the surplus, allocating $3.5 billion to the state emergency fund and bringing it to $13.5 billion, or 100 percent of the fund’s constitutional target. Another $2.3 billion would go to the state’s operating reserve fund. And it would allocate an additional $3 billion to K-12 school districts, completing a funding formula for local schools two years ahead of schedule.

The budget also proposes a $570 million increase for community colleges and 3 percent funding increases each for the University of California and California State University as long as they hold the line on tuition. It would allocate more than $100 million to launch the first fully online community college in the state, with the aim of encouraging people who don’t have access to campuses to enroll “virtually.”

Eloy Oakley, chancellor of California’s community colleges, applauded the online college proposal. “California community colleges are serving 2.1 million students each year, but we are still not meeting the needs of 2.5 million others who for a variety of reasons cannot attend classes on our campuses,” he said. “It’s our responsibility to bring the campus to them, and we can do that through a fully online college.”

But UC President Janet Napolitano and UC Board of Regents Chairman George Kieffer were less happy, arguing in a statement that the 3 percent increase for their system was “less than we anticipated under the framework we established with the governor.” The two had requested additional money to add more graduate students.

Brown’s cautious budget comes as California continues to face questions about how the fiscal impact of policies in Washington, including the federal tax bill that some experts believe will hurt the Golden State’s economy.

State legislators have proposed a plan that would let California taxpayers pay their state taxes to a special fund that could be counted as a charity, in order to get around the tax bill’s limitation of federal deductions for state and local tax payments.

Brown voiced interest in that proposal Wednesday, telling reporters, “I’m certainly open to it.” He said the Legislature should determine whether the Internal Revenue Service could issue a regulation to completely subvert the fund.

The budget could also be rocked if voters approve a ballot initiative to repeal the gas tax that Brown championed last year, which raises $5 billion annually for road repairs and other transit.

“If it were to pass, it would be a blow to California’s economy,” Brown said of the repeal drive.

Brown’s budget includes $18.7 billion for transportation programs and improvements, up from the $18.1 billion allocated last year, a modest 3 percent increase. Cities and towns will see significantly more money in their coffers — $2.7 billion compared to $1.6 billion last year — to pay for local street and road repairs, thanks to the gas tax.

Solano County leaders

Assemblyman Jim Frazier, D-Solano, who is chairman of the Assembly Transportation Committee, is pleased with that particular move.

“I am proud to see the Road Repair Act finally being implemented, protecting our economy by continuing to invest in our infrastructure,” Frazier said in a prepared statement. “A constitutional amendment I authored, ACA 5, which will be on the ballot for voter approval in June, guarantees that revenue from the Act will be spent only on transportation projects.”

Frazier added that the increased investment in K-12 and higher education contained in the budget proposal will make “quality education more accessible to California families.”

Senator Bill Dodd, D-Solano, agreed that education is one of those critical services worth the investment.

On the forefront of his mind, however, are disaster recovery and preparedness.

“Supporting wildfire recovery and reducing fire risk must be top priorities in the budget,” Dodd said in a prepared statement. “I believe Gov. Brown’s budget reflects a thoughtful starting point for this year’s budget negotiations.”

Dodd added that he’ll be working with the state’s administration and colleagues in the Legislature to expand efforts on disaster recovery and preparedness.

The state senator went on to say that the governor “has continued his record of proposing thoughtful spending.”

“It’s absolutely critical that the state pay down debts and building our rainy day fund, while investing in critical services,” he said. Education, Dodd noted, is one of those critical services.

Dodd recently announced he authored a bill designed to provide preschool to all 4-year-olds statewide.

“Adopting universal preschool is an investment in our future that will pay dividends for years to come,” Dodd said at the time of the announcement. “As a father and a grandfather, I know that there is no more precious resource than our young people. We need to step up our investment in the next generation. Universal preschool is absolutely essential for economic vitality and social mobility.”

Wednesday he added that expanding preschool access will “improve student success and lifetime incomes.”

Democrat leaders

Democratic legislative leaders applauded Brown’s proposal.

“In contrast to the tumultuous governance model championed by Washington these days, I am grateful to hail from a state that has prioritized fiscal responsibility and progressive investments,” Assemblyman Phil Ting, D-San Francisco and the chairman of the Assembly Budget Committee, said in a statement.

Sens. Kevin de León, the state Senate leader, and Holly Mitchell, the Senate budget committee chairwoman, also lauded Brown’s budget as financially responsible, but suggested they wanted to see increased funding for education, child care and poverty reduction programs.

“We do need to invest more, I believe, in education, as well as higher education, especially with those children who have the least opportunities to prosper economically,” De León said.