May 12, 2018: SAN FRANCISCO CHRONICLE - Jerry Brown tells lawmakers to bank added billions
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By Melody Gutierrez
SACRAMENTO — Gov. Jerry Brown took one last opportunity Friday to tell Democrats who dominate the Legislature that the state’s boom times will end someday, so save those billions of dollars that are unexpectedly rolling in now.
In releasing his final budget proposal, the termed-out Brown called for holding onto most of the extra $8.8 billion in unexpected revenue in his spending plan unveiled Friday.
“We’re nearing the longest recovery in modern history, and as Isaac Newton observed: What goes up must come down,” Brown said. “This is a time to save for our future, not to make pricey promises we can’t keep. I said it before and I’ll say it again: Let’s not blow it now.”
The surplus will be fiercely fought over in the Legislature during the next month of budget negotiations for the fiscal year that starts July 1. Brown is proposing to stash $7.6 billion, with $3.2 billion going toward the state’s budget reserve for unexpected expenses like wildfires and floods, and $4.4 billion into a rainy-day fund that would be used during a recession.
With the money added to the rainy-day fund, California would max out that reserve pot at $13.8 billion by the end of the next fiscal year. By law, the fund can hold no more than 10 percent of general fund revenue.
Brown’s revised $138 billion general fund budget calls for the state to spend $2 billion on university and court buildings upkeep, $359 million to help local governments combat homelessness, and $312 million to boost mental health programs.
That comes up short of the spending that many Democrats were looking for. Mayors of the 10 largest cities in the state met with Brown last month to press him to support a bill by Assemblyman Phil Ting, D-San Francisco, that would put $1.5 billion toward housing more homeless people.
Assemblyman David Chiu, D-San Francisco, said Brown’s budget fails to address another pressing issue, the shortage and soaring cost of housing.
“If we are going to have a lasting impact on the lives of all Californians, we must invest more in increasing the supply of affordable homes for our rent-burdened, low-income families,” Chiu said.
Democrats in the Assembly want $1 billion for a major expansion of Medi-Cal, which would include extending coverage to undocumented immigrant adults under the age of 26 and creating a tax credit for health insurance premiums.
“This would be a down payment toward universal coverage,” said Anthony Wright, executive director of the advocacy group Health Access California. “It helps individual Californians get covered and get care, and it stabilizes the system against the premium spikes being caused by the Trump administration.”
University of California and California State University leaders said Brown’s funding proposal fell short of what they need. Brown held steady to his January proposal for a 3 percent funding increase, but added $100 million to each university system for building maintenance.
CSU Chancellor Timothy White said he is grateful for the one-time funding to help with a backlog of deferred repairs, but that campuses need more money to create the classes students must take to graduate in four years.
“With state revenue continuing to exceed projections — and California facing a large need for more educated citizens over the next decade — there is both a need and an opportunity to reinvest in the operating budgets of public higher education — and the CSU specifically,” White said in a statement.
Brown said there’s merit to many such requests, “but we are already overextended. That’s hard to believe when you have so much money in the bank, but I’m telling you we are overextended.”
Much of the state’s surplus is driven by taxes on capital gains and other income from high-wage earners, a pile of money that Brown has long cautioned is prone to shrinking abruptly when the economy turns sour.
Republicans, whose support isn’t needed for Democrats to pass a budget, signaled their approval of the governor’s plan to steer money into the state’s reserves. But even some GOP lawmakers have budget requests they think are deserving of some of the surplus.
“We know the economy will go down, and we should increase our rainy-day fund even more,” said Assembly Republican leader Brian Dahle of Bieber (Lassen County). “But we want to see more water infrastructure created. We’d like to see some resources spent on opioid addiction, which is one of the reasons we have homelessness.”
Brown included $96 million in his revised budget for projects aimed at reducing the risk of fires in the state, such as doubling the acres of land managed by controlled burns. That money is in addition to $160 million in cap-and-trade revenue that the governor previously proposed for fire protection next year.
Sen. Holly Mitchell, D-Los Angeles, called Brown’s budget a “strong starting point.” The Senate budget committee chairwoman said it’s good to look to the future, but that there are immediate needs as well.
“We also have to lift up the families that are struggling now,” Mitchell said.
The Legislature must pass a budget by June 15, and Brown has until June 30 to sign it. The governor said he was open to talking about spending priorities with lawmakers, but that his priority is ensuring the state is on solid fiscal ground.