California Budget Increases Spending as State Enjoys a Surplus

[JohnR! 5,495]

California recovers after the Governator... WTG Cali!!

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http://online.wsj.com/news/articles/SB10001424052702303393804579310603091572462

California Budget Increases Spending as State Enjoys a Surplus

SACRAMENTO, Calif.—A resurgent stock market and a voter-approved tax increase has given California a windfall of several billion dollars, resulting in a rapid turnaround from the state's massive budget gaps of recent years.

On Thursday, Gov. Jerry Brown called the improvement in the state's fiscal house "good news," and he proposed spending an additional $10 billion annually for California's schools. But anticipating calls for further increased spending and preparing for a likely re-election bid, he also urged fiscal restraint as he officially proposed a $154.9 billion budget.

"By no means are we out of the wilderness, we have serious issues before us in terms of long-term liabilities, debts, and we must be very prudent in the way we spend public funds," Mr. Brown said. However, "after years of drought, and cutbacks and pink slips for the teachers, we are finally able to provide a substantial amount of new money for all the schools of California."

The document sets up roughly six months of negotiations with a Democratic-controlled legislature that will likely face pressure to increase spending and restore some of the big cuts to social services the state has experienced in recent years. A budget must be approved by June 15 so it can be enacted by July 1.

Mr. Brown was forced to move his budget announcement up a day after the document was leaked to the media Wednesday. He hastily rescheduled a trio of news conferences set to take place here and in Los Angeles and San Diego.

The document opens with a letter to the legislature in which he warns that the state's surplus—estimated at being roughly $4.7 billion by June 30 by the state's Legislative Analyst's Office—is modest, given the state's large pension liabilities, bond costs and other expenses.

Mr. Brown's proposed budget increases kindergarten through 12th grade public education spending by $10 billion, sends new money to colleges and universities, and allocates money to expand health-care coverage to millions.

The plan contains a warning about the state's boom-and-bust budget history, saying it is "riddled" with permanent spending increases made during times of temporary revenue spikes, while now seeking to rebuild the state's finances. Notably, it proposes using the state's surplus to make the first deposit since 2007 into the state's "rainy day fund."

Mr. Brown also seeks to pay money owed to state schools but deferred during the years of crisis as well as pay back bonds sold to balance the budget 10 years ago, and make some infrastructure improvements. In addition, the budget endorses a plan to strengthen the rainy day fund through constitutional amendment.

Despite sounding the notes of fiscal restraint, Mr. Brown's budget proposal is 6.3% larger than last year's. It also reflects the governor's commitment to a troubled $68 billion plan to bring high-speed rail to the state by proposing to help finance the project using $250 million in proceeds from selling cap-and-trade pollution credits.

In introducing his budget proposal Thursday, the Democratic governor said that beginning to pay down California's massive "wall of debt" must be a priority. His proposal for the 2014-15 fiscal year dedicates $11 billion to paying down debts and liabilities, including $6 billion in payments to schools that had been deferred.

He also sets aside $1.6 billion for the rainy day fund to protect against future downturns, saying "wisdom and prudence should be the order of the day."

The record $106.8 billion general fund exceeds the spending level in place just before the recession by more than $3 billion, and is a nearly 9% increase over spending in the current fiscal year.

Edited July 2, 2014 by JohnR!

[Peikko 1,575]

Yep, he's done a good job so far on curbing spending to fit the budget. Hopefully the next incumbent will not just come in and 'spend' his inheritance, which seems to happen rather frequently in US politics .

[GandD 5,966]

Yep, he's done a good job so far on curbing spending to fit the budget. Hopefully the next incumbent will not just come in and 'spend' his inheritance, which seems to happen rather frequently in US politics .

I don't get "the next incumbent". How does that work?

[Peikko 1,575]

Brown is the governor, governor is not a permanent position. We have seen this before, one guy works hard to tighten the reins, put the budget back on track, the next guy comes in, sees 'surplus' and instigates a spending program. He is right, boom and bust is a bad way to run a state, but there is no certainty that whoever takes over the reins next time will follow his good example. Generally, that doesn't give the best political capital for the governor.

[GandD 5,966]

Brown is the governor, governor is not a permanent position. We have seen this before, one guy works hard to tighten the reins, put the budget back on track, the next guy comes in, sees 'surplus' and instigates a spending program. He is right, boom and bust is a bad way to run a state, but there is no certainty that whoever takes over the reins next time will follow his good example. Generally, that doesn't give the best political capital for the governor.

No I get all that. But why did you say next incumbent?

[Peikko 1,575]

No I get all that. But why did you say next incumbent?

That's the word for a sitting governor, no? An incumbent? I am not sure I understand the question

[GandD 5,966]

That's the word for a sitting governor, no? An incumbent? I am not sure I understand the question

I guess I was thinking of the word incumbent in terms of election. No one will be an incumbent during the next election. I thought you meant something about how the next guy was an incumbent for some reason. Nevermind, I thought you were implying something.

[Peikko 1,575]

No, not implying anything except that the next governor better not this up!

[JohnR! 5,495]

Yep, he's done a good job so far on curbing spending to fit the budget. Hopefully the next incumbent will not just come in and 'spend' his inheritance, which seems to happen rather frequently in US politics .

Hopefully that won't come to pass. I don't believe the Teaparty Bullies have a chance at getting elected for his office.

[mota bhai 2,675]

No, not implying anything except that the next governor better not #### this up!

He/she will. It's a pattern in this country, like you've pointed out. A not-nutty-librul Democrat gets elected, does some good like this guy has.... and the electorate sees it as "left wing ####### really works" and they elect a nutty-librul Democrat next who goes koo-koo with his brand new cocoa puffs.

[Peikko 1,575]

He/she will. It's a pattern in this country, like you've pointed out. A not-nutty-librul Democrat gets elected, does some good like this guy has.... and the electorate sees it as "left wing ####### really works" and they elect a nutty-librul Democrat next who goes koo-koo with his brand new cocoa puffs.

Sadly, that's probably true