"We're Finally Facing the Music"

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The only thing a governor of California really has to spend these days is political capital. And on that front, Governor Jerry Brown seems to be going all in from the get-go.

Brown's new state budget, an 18-month proposal of almost equal parts tough cuts and tough taxes, has sparked brush fires in just about every part of the political world. And the veteran pol seems like he wouldn't have it any other way.

"It's going to be objected to," he told reporters this morning. "But there are going to be even more people who say, 'Thank God, we're finally facing the music.'"

Brown walked into a news conference at the state Capitol this morning armed with a simple PowerPoint, a 178-page budget summary, and a single message: this is about as good as it's going to get.

"It's better to take our medicine now and get the state on a balanced footing," said Brown.

So much of the governor's proposal -- the broad strokes, at least -- had been leaked and buzzed about for so long that today could've been somewhat anticlimactic. But once it was all over, there was plenty left to ponder about the policy issues and the politics facing Brown and legislators over the coming weeks and months.

Four Years of Balanced Budgets? Brown's proposal, a wallop of $12.5 billion in spending reductions and about $12 billion in taxes, plus a few other smaller fixes, would -- if the forecasts prove accurate -- leave the state with a $1 billion reserve as of June 30, 2012. But perhaps more interesting is that the governor's budget team predicts the changes would wipe out the state's nagging structural deficit for the next three fiscal years, even leaving a $2.4 billion surplus in the year ending June 30, 2014 (and yes, that's a gubernatorial election year). But while the charts don't project beyond 2014-2015, keep in mind the proposed tax hikes would expire after five years, meaning some other solutions or economic recovery would have to take over from there.

Speaking of Projections: January budget proposals are always full of economic modeling and forecasting, and Governor Brown's first spending plan is no different. Included are the first official projections of the loss of revenue stemming from the federal tax relief deal struck between Congress and President Barack Obama at the end of 2010. That deal is now expected to lower state revenues by more than $1 billion in the current fiscal year alone.

Meantime, another sobering projection can be found in the writeup on California's persistently high unemployment rate:

The state is forecast to recover the nonfarm jobs lost during the recession in the third quarter of 2016, or approximately 87 months after the end of the recession. During the previous six recessions, full job recovery was achieved between 4 and 56 months.

News Flash: Prisons Cost Money. The governor's promise to deliver an honest budget may be debated in some corners of the massive document, but it's hard to not give him a gold star for the spending plan for prisons. The last several years worth of state budgets have included hundreds of millions of dollars in "unallocated reductions" that never came to pass, and reductions to the federal court-appointed prison health care receiver's budget... which would be fine, except the state really doesn't control what that operation spends. Brown's corrections budget tackles the subject with a discussion entitled "Elimination of Unrealistic Savings Estimates.' It says, in part:

...large scale reductions within CDCR's budget must involve population decreases. The difficulty of deciding on an appropriate course of action, while minimizing any effects on public safety, have resulted in [previous] unallocated reductions to CDCR's budget in recent years without corresponding legislation that would make it possible to achieve these reductions...The restoration of funding related to unrealistic savings is another aspect of the [Brown] Administration's determination to ensure CDCR has sufficient funding is then held accountable to restrain spending within that level.

Is K-12 Education Being Held Harmless? While Brown and his advisers have been saying that public schools would (assuming the June election tax package passes) be left pretty much at current funding levels, education advocates said late today that they believe there's an actual $2.1 billion reduction in the coming fiscal year. No part of the budget is more complicated that school funding, and a query to Brown's budget team hasn't yet been answered, so stay tuned. [update 9:29 pm - veteran budget spokesman H.D. Palmer, sticking around for another tour of duty with this Guv, says the only "new" reduction for schools would come in the way of a $400 million larger deferred payment than the $1.7 billion called for in the budget enacted last October.]

Is Realignment Paid For? We've been talking a lot lately about Brown's intent to start shifting responsibility and resources to the local level for a number of programs now governed by the state. Today, the governor made clear that he's focused on shifting fire protection services, court security, community-based (low level offender) corrections, mental health services, foster care, child welfare services, substance abuse services, and adult protective services. A good chunk of the tax increases he'd place on the ballot would pay for all of that... but only for five years (remember, it's a temporary tax).

Locals are decidedly nervous about the temporary nature of the revenues, and Brown admitted today that there's no firm plan for the funding after five years, only that the state will be back on the hook. "The state will continue [to pay], even if the taxes go away," he said.

The Redevelopment Slugfest: The governor's proposal to begin phasing out the existence of California's 397 redevelopment agencies (RDAs) is going to be one of the real battles to watch in 2011. RDAs exist in both cities and counties around the state, and are given a share of property taxes that are often leverage against private sector dollars for economic development projects. RDAs don't, on the whole, have money sitting in the bank; most of their money is tied up in projects with long-range commitments. And so Brown proposes to stop funding RDAs sometime after July 1, with future property tax dollars redirected to local programs and schools. A long story can (and, later, will) be written on the pros and cons of the RDA process in California. But the governor's plan is already igniting a battle royale by RDA supporters, who blanketed my email today with stats about jobs created by redevelopment projects and thus equating the Brown plan with an economic poison pill.

Meantime, the leader of the state Senate said today tough times demand tough discussions. "It's about making sure everything competes for the limited dollar," said Senate President pro Tem Darrell Steinberg. "Let's stack up the money... and compare it to another $1 billion in cuts to assistance to work or child welfare or education."

The Democratic Dilemma: Speaking of dramas to watch, the way in which Democratic legislators react to their Democratic governor through the budget talks will be particularly interesting. Case in point: Brown is asking the Legislature to ratify the $12.5 billion in cuts before a June special election on the taxes. Republicans have often suggested as many cuts as possible before any other budget balancing items are discussed, and perhaps the new governor thinks the move will reassure voters that lawmakers are being fiscally prudent. But given the depth of the hits he's proposing -- welfare assistance, in home support care, health care for the poor -- Dems will no doubt be wary. Senate leader Steinberg conceded today that it's "a huge risk" to do the cuts first.

Brown's Philosophy: Given this was Jerry Brown's first real foray into making budget proposals -- remember, he was virtually mute on actual proposals during his winning campaign -- I wondered whether the document submitted is a reflection of his own policy beliefs, an imperfect document reflecting the tough politics of the time, or both. And so I asked the governor to elaborate during today's news conference.

He paused before answering, made a joke (one he's made before) about how not all parts of California voted for him, and and then said this: "There are very different views of what the state needs. And I'm not going to try to resolve that. As the chief executive here, I'm trying to forge a consensus, a wider agreement, get people out of their ideological positioning."

Brown then acknowledged the tough nature of the cuts but said his plan was the best thing he could come up given the "real world" scenario which the state faces.

The answer as to how he feels about the budget seems fairly obvious from those comments. Even so, he's standing by the proposal... and hoping others will, too.

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About John Myers

John Myers is senior editor of KQED's new multimedia California Politics & Government Desk.  He has covered California politics for most of the past two decades -- serving previously as Sacramento bureau chief for KQED News and, most recently, as political editor for KXTV News10 (ABC) in Sacramento. He moderated the only gubernatorial debate of 2014, and was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.

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