In his May revise, the big headline was the estimated $6.6 billion in additional revenue that came in or will come in.  That is, no matter how you look at it, a good thing.  However, with a big group of taxes set to expire at the end of June, we are still miles away from a sustainable budget.  But rather than playing the old Arnold game (no, not that game) of gimmicks and hoping things turn out well, Gov. Brown is looking to set the state up for something it hasn’t seen for a while: stability.

Brown acknowledged that an improving economy and the good fortune of some of the state’s wealthiest residents will likely mean a surge of about $6.6 billion in unexpected tax revenues this year and next. But he said that is not enough to dig the state out of its hole.

Even with that money, he said, the state still has a $10 billion “structural deficit” – a permanent gap between revenues coming in and spending required by current law.

Brown said he wants to use some of the revenue surge to make up for the delay in reenacting the income tax increase. About $1.6 billion of the new money will go to kindergarten-through-community college education. And about $1 billion will go to erase the need to shift that amount from a special tobacco tax fund that pays for children’s services in counties across the state. (HealthyCal)

The budget also provides for a delay on the income tax rate extensions until next year, but, if he can get the votes, would immediately extend the sales taxes.  I certainly understand the math there, as the sales taxes are pretty much mandatory to retain in the system.  And Jerry wants to make the taxes a little less painful in the short term.  However, one has to wonder if the delay is really the best use of resources.  On policy terms, probably not, but politically it may be a requirement.

The one thing that we hear on taxes when we are on this side (ie the not so great side) of the economy, is that we can’t afford to tax the economy now.  Of course, when we’re going good, we can’t afford to break momentum.  Amazing how that works.  Nonetheless, as we see with this tax revenue surge, we are really making progress in the state, and we really can’t afford NOT to extend the rates and ensure that we have a consistent level of services for the state.

Gov. Brown also included full funding to Prop 98 levels if he gets his tax extensions, which is a step in the right direction.

Now if we can just get those extensions to make the May Revise a little more real.