Jan. 10, 2018: THE HILL - Brown plays defense with California's budget surplus

January 10, 2018

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By Reid Wilson

SACRAMENTO — California Gov. Jerry Brown (D) offered a plan Wednesday to propose fully funding the state's rainy day account, even as he acknowledged lawmakers in the overwhelmingly Democratic state legislature will want to use a multibillion dollar budget surplus to boost state spending elsewhere.

Brown, laying out his proposals for the final budget of his second eight-year stint in office, warned that a record-breaking economic recovery is unlikely to last well into his successor's term. The ups and downs of any given economic cycle, he said, can put a squeeze on the state's notoriously volatile tax revenues.

"We haven't hit that recession yet, but we will," Brown said Wednesday at the state Capitol here. "The only way we can prepare is to watch your spending each year and to build up the rainy day fund."

Brown's budget proposes $131.7 billion in general fund revenue. His proposal shepherds $5 billion into a rainy day fund created by voters several years ago, with the intention of handing off a fully stocked $13.5 billion fund to his successor.

"We have to be on our guard. It's not exciting, it's not funding good and nice things, but it's getting ready" for the next recession, Brown said.

But in the five months ahead of a budget revision in May, when the governor's Finance Department will offer updated revenue and spending figures, Democrats in the state legislature are likely to offer their own ideas about how to spend the state's $6.1 billion surplus, beyond the constitutionally mandated $1.5 billion contribution to the rainy day fund.

State Sen. Holly Mitchell (D), chair of the Senate Budget Committee, said she wanted to see increases in social services spending and cost of living adjustments for Supplemental Security Income. 

Senate President Pro Tempore Kevin de León (D) said he wanted to fund free community college for first-year students, and he pushed to increase funding for emergency preparedness after wildfires tore through California wine country and the Los Angeles area last year and just a day after mudslides killed at least 13 people in Southern California.

That sets up another, final fight between Brown, who has sought to bolster the state's financial reserves, and the more liberal and spendthrift legislature. Tellingly, Republican leaders sounded more positive about Brown's budget than did Democrats.

"I'm encouraged that the governor wants to add an additional $3.5 billion into the state's rainy day fund," Senate Republican Leader Patricia Bates said in a statement. "Republicans fought to establish the rainy day fund and we share the governor's concerns about a return to deficit spending as even a mild recession could lead to painful decisions in the future."

That future will be confronted by the next governor, after Brown steps down next year due to term limits.

The race to replace Brown has yet to produce a candidate who shares his cautious approach to fiscal matters. Brown has declined to endorse any of the leading candidates, though he warned the next governor is likely to face an economic downturn. Brown himself inherited a $28 billion budget hole when he returned to office in 2011, in the wake of the national recession.

"The next governor is going to be on the cliff," Brown said. "What's out there is darkness, uncertainty, decline and recession. So good luck, baby."

Brown's budget adds $3 billion to K-12 education funding over the next year and $570 million for community colleges, including a $46 million investment in the free first year program passed by the legislature last year.

California, which has become something of the capital of the resistance to President Trump on issues ranging from climate policy to immigration, would also spend $48 million on aid to immigrants, like legal assistance for those in jeopardy of deportation.

Brown declined several opportunities to take overt swings at President Trump, even crediting the administration for its responsiveness to federal disaster aid requests. But Brown said the GOP's tax overhaul, which limited deductions for state and local taxes, amounted to "an assault" on California and other blue states.

"It's really a dumb move on the part of Republicans, and I'm hopeful that the next Congress will be Democratic and will reverse that" tax bill, Brown said, just hours after Rep. Darrell Issa became the latest California Republican to say he would not seek a new term this year. "They're a temporary majority. Their members are leaving in discouragement. So there's always an opportunity to get a more conciliatory Congress."