Written by The Business Journal Staff
(AP) — Gov. Jerry Brown on Friday proposed a $122.2 billion spending plan for California, down slightly from his January proposal after he projected tax revenues falling about $1.9 billion below expectations and a deficit when voter-approved sales and income taxes begin to expire.
“The surging tide of revenue is beginning to turn, as it always does. That’s why it’s prudent and best that we prepare for a time of necessity,” the governor said.
Tax collections have slowed since January, when Brown proposed a $122.6 billion general fund spending plan for the 2016-17 fiscal year beginning in July. By law, about half the state’s spending goes to K-12 education and higher education.
In recent months, the Democratic governor has approved raising the minimum wage to $15 an hour and signaled he was open to liberal priorities. But his budget proposal left fellow Democrats mostly disappointed as he continued to favor savings, debt payments and deferred maintenance over increases to social service programs.
“Given the unacceptably high number of Californians living in poverty, we must make targeted reinvestments in education, health and social service programs that help lift up the most vulnerable residents of our state,” said Sen. Mark Leno, D-San Francisco, chairman of the Senate budget committee.
Brown’s budget plan also calls for adding $2 billion to the state’s rainy day fund to prepare for the next recession.
Assembly Minority Leader Chad Mayes, R-Yucca Valley, said Republicans stood with the governor in his call for fiscal restraint, asserting that new spending should be reserved for one-time critical needs such as water, school and transportation infrastructure.
“Saving for the future and addressing more than $200 billion of existing budgetary debts and unfunded liabilities is the right thing to do,” Mayes said in a statement.
Friday’s release opens up a monthlong debate with lawmakers in the Legislature, who will have until June 15 to hash out their own version of the spending plan and send it to the governor.
Lawmakers from both parties had urged the governor to increase funding for some safety net programs that were slashed during the Great Recession.
Democrats want $800 million to increase rates paid to subsidized daycare providers and to provide care to more children. They’re also looking to eliminate a condition in CalWorks that prevents families from getting additional welfare benefits if they have another child while receiving state assistance.
Senate President Pro Tem Kevin de Leon, D-Los Angeles, said Democrats would continue seeking to expand welfare limits, affordable childcare and access to universities. The governor’s proposal included a demand from Senate Democrats to divert $2 billion from voter-approved mental health funding for housing for the homeless, a growing problem in California.
Republicans want to increase payments to dentists who serve the poor. They’ve also advocated a series of tax breaks, such as capping property taxes for seniors and disabled military veterans, creating a weekend-long sales tax holiday for school supplies and allowing people to use pre-tax dollars to save for a down payment on a home.
Brown’s proposal also seeks $36 billion over 10 years to begin paying for a $59 billion backlog of road repairs, but he has seen no progress on his January call to raise gas taxes and vehicle fees to begin funding the work.
Tax collections have slowed due in part to stock market fluctuations. The state controller reported Tuesday that revenue in April, the highest-earning month, was $1.19 billion short, mostly because personal income tax collections failed to keep pace with expectations.