Budget Revisions But Staying the Course

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If Governor Jerry Brown has a backup plan to extending several billion dollars in taxes, he's not showing it. Not yet, at least.

Brown's revised budget, unveiled at a very lengthy news conference (by gubernatorial standards) on Monday morning marks the end to at least the debate over projected revenues -- up $6.6 billion and thus changing both the policy and political debate from here on out.

Now, for the rest of it...

School Daze: Education groups didn't give Brown a standing ovation, but they have to be generally pleased by the revised spending plan. With the two year budget plan adding that $6.6 billion in heretofore unprojected tax revenues, the big winners are public schools. The governor's plan raises the Proposition 98 funding guarantee to $52.4 billion for 2011-12, $3.1 billion more than his January proposal. In addition, Brown's new budget proposes to wipe out the January plan to defer $2.1 billion in K-12 payments as well as begin repaying the $8.2 billion of money owed to schools from the last few years. On the other hand, the new budget shoves several additional expenses under the Prop 98 umbrella -- including mental health services that were originally part of Brown's state/local realignment plan. The headline of "More Money For Schools" comes just days after a week of education protests in Sacramento and elsewhere. It's also worth noting that legislative Republicans, too, have promised to protect education funding. Bottom line: school groups are in reasonably good position, once the budget dust settles later this year, to get what they say they need.

How's Your Calendar Look for 2012?: Reporters looking for any hint of something not so policy-laden on Monday latched on to at least a small divergence of opinion in Democratic ranks. In his Q&A with reporters, Governor Brown reiterated his desire to have an election as soon as possible, while also admitting that what he's really now asking the Legislature to do is to conditionally approve the tax extensions subject to a statewide vote as soon as possible. But a while later, Senate President pro Tem Darrell Steinberg made clear that as far as he's concerned there's no longer a reason for a special election in 2011. "If there has to be an election," said Steinberg, "it ought to be as far off as reasonably possible." He then went on to peg "far off" as 2012, though he didn't specify which scheduled election (February presidential primary, June statewide primary, November general). Education groups, as well as many others in organized labor, have been pushing ever-so-much-more loudly of late for the Guv to skip the campaign promise of an election altogether. With Brown clearly not budging, it seems a work around to his promise is out there for the taking.

Trigger Rides Again: The Brown-Steinberg divergence on an election date proved to be only one of two 'Is There Disagreement?' story lines to ponder. Governor Brown again on Monday rejected call for him to lay out a 'Plan B/No Tax/All Cuts' scenario should his five year tax extension (four for the income tax surcharge) go belly up in the Legislature. "I'm not going to give the Republicans a road map to ruin," said Brown when asked why he's not laying out an alternate should his tax plan not come to pass. "I've given them a road map to success." But about 90 minutes later, the person asking for the road map in question was Brown's longtime Democratic friend, Treasurer Bill Lockyer. And in a particularly pointed written statement, he said that 'Plan B' isn't optional.

The [Brown] plan's effect on our ability to borrow $10 billion to meet the state's cash-flow needs remains unclear. If full implementation of the Governor's FY 2011/12 plan remains contingent on voter approval of taxes, my office will not be able to complete a cash-flow borrowing transaction unless the final adopted budget includes real, inescapable, quickly-implemented spending cuts that would be triggered if voters reject the taxes.

Cash flow may be one of the trump cards of this saga, as it has been in budget fights of years gone by. Almost every year, the state gets what amounts to a bridge loan from Wall Street to even out the ebb and flow of tax revenues. Lockyer's insistence on a worst-case scenario may not really put him at odds with the governor; to be fair, part of Brown's rationale for not laying out a 'Plan B' is that everyone already has a pretty good idea of what would happen. Nonetheless, it adds some financial heft to the point that many Democrats and Democratic-leaning interest groups have been making for weeks.

Alphabet Soup -- EZ and SSF Tweaks, RDA Holding Firm: Governor Brown's January plan went after several pots of money that, aside from the tax fight, stirred the biggest battles to date. The original budget ended the tax breaks for enterprise zones (EZs), abolished local redevelopment agencies (RDAs), and scrapped the elective singles sales factor (SSF) method for corporate taxes with the resulting extra dollars flowing back to the general fund. The revised budget takes a portion of the mandatory SSF and earmarks it for a business equipment sales tax exclusion. Meantime, Brown has also backed off on eliminating enterprise zones, now proposing that the tax break continue for companies that create new jobs. When asked Monday why he backed off the EZ cancellation, Brown said simply, "I don't see the [legislative] votes there." But his revised budget continues to push for abolishing RDAs, which led me to ask why the same argument (not enough votes in the Legislature) didn't also apply. The governor didn't really respond, arguing that the GOP budget plan admits that his RDA plan might win out (though that plan also suggests an alternative might also prevail, one that would bring in less money to the state's coffers).

And on that issue, he added a quip which likely sums up not only his feeling... but the general frustration of most governors when they hand off a budget plan to the legislative branch of government. "I've given you the blueprint," said Brown. "And now the other architects will start to screw it up."

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About John Myers

John Myers is senior editor of KQED's new 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. In 2014, he was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.
  • Benjamin Leyva

    I believe gov. Brown’s budget plan is simple and straight forward, yet the GOP plan has its ups, generally more than Brown’s plan, considering the public’s take on an extended tax increase. With that being said something has to be done with Califorina’s budget, and both sides need to compramise. On a personal note to Brown things will always be changed.