California governor pitches robust budget as revenues surge

SACRAMENTO, Calif. — Gov. Jerry Brown proposed a $137.6 billion general fund budget for California Friday amid surging revenues, kicking off his last round of negotiations with Democratic legislative leaders.

Brown’s latest budget is up nearly $6 billion from his earlier proposal in January. The Democratic governor wants to save most of the surplus to protect spending during a future recession, proposing to set aside $13 billion in California’s rainy day fund “to weather a storm that will be more like $60 billion.”

The Democratic governor warned that the revenue is “not in the bank” but “it is a prediction.”

“Life is very giddy at the peaks … but I’m not giddy,” he said.

Brown last pegged the surplus at $6.1 billion in January and proposed spending almost none of it, preferring to direct all but $300 million to reserves. Since then, revenue during the busy April tax-filing season came in even higher than expected.

Brown has repeatedly warned that California is riding a wave of economic growth and the budgetary good times will eventually end. He’s generally resisted new ongoing spending on social services that he says can’t be sustained.

Still, on Friday he proposed $2 billion for infrastructure, including universities, courts, state facilities and flood control and $359 million to help local governments address homelessness.

But he’s facing pressure to boost funding on a wide variety of legislative priorities including higher education, child care and firefighting.

Assembly Democrats said this week they’ll push for a $1 billion boost in spending on health care, including $250 million to provide state-funded health coverage to low-income California residents living in the country illegally through the Medi-Cal program. Their proposal would also provide money to offset monthly premium costs for people who buy their own insurance coverage.

They have also proposed expanding the earned-income tax credit to help the working poor.

Brown’s opening proposal in January would have spent $131.7 billion from the general fund. By law, about half of the budget is automatically directed to K-12 education and community colleges.

His January proposal would have created a new online community college that would primarily serve working adults. His administration has aggressively worked to sell lawmakers on the plan and said recently that the first curriculum would be a certificate in medical coding.

He said Thursday that his budget proposal will include $96 million for a variety of efforts to prevent wildfires, including doubling the amount of land that’s actively managed through vegetation thinning, controlled burns and reforestation.

California firefighters and fire chiefs have asked for $100 million for overtime, equipment and dispatchers to better prepare for potential fires during risky weather conditions.

Brown will negotiate a final spending plan with Democratic legislative leaders. The Assembly and Senate have until June 15 to pass a budget under the state Constitution. If they’re late, lawmakers’ pay will be docked.

Brown has presided over a stark turnaround in California’s finances. The state’s budget, which has historically been subject to steep highs and deep lows, has grown 45 per cent since 2011, when he took office facing a $25 billion deficit thanks to significant income growth among wealthy taxpayers. Forty per cent of California’s personal income tax revenue comes from people earning $1 million or more per year.

Republicans say the budget growth is a sign that taxes are too high.