Additional Revenue will be steered to education under Prop 98

by Brian Leubitz

The Proposition 30 funds will sunset in a few years, but the surplus revenue is nice while it lasts. With the economy picking up speed, and an additional few billion in unexpected revenue, Gov. Brown has some flexibility that wasn’t there a few years ago. So, he’s gone through his laundry list:

For the budget year (2014-15), the May Revision sets aside $1.6 billion to make the final payment on the Economic Recovery Bonds and another $1.6 billion for the Rainy Day Fund.

The May Revision reflects more than $2 billion in added costs over and above the January budget. This includes higher spending to provide health care coverage under Medi-Cal for a million more people, emergency drought assistance, added funding to meet the Proposition 98 guarantee for K-14 schools, caseload increases in the In-Home Supportive Services (IHSS) program, additional contributions to the California Public Employees’ Retirement System (CalPERS) and added staffing to administer California’s unemployment insurance program.

When Governor Brown took office, the state faced a massive $26.6 billion budget deficit and estimated annual shortfalls of roughly $20 billion. These deficits, built up over a decade, have now been eliminated by a combination of budget cuts, temporary taxes and the recovering economy.

Could he have done more to restore some of the massive cuts of the 2007-2012 era? Probably, but Gov. Brown was never going to wipe all that away in one cycle. That has just not been his style since his Oakland mayoral days. But the May revise moves the state forward and is a solid foundational document for the future.

Parts of this will clearly change as the Speaker and Senate leader get a hold of it, and there are certainly improvements to be made. However, with the rainy day deal already done, half the battle is behind us and the politicians are looking to the upcoming elections.