Legislature Agrees to Deal with Governor, Set to Pass Soon

by Brian Leubitz

It turns out representative democracy works. It really works! When you let the majority party do its job, they tend to get it done. It doesn’t hurt that the Governor is of the same party as well, of course. However, in the end, the Governor got most of what he wanted, this is primarily a budget with limited restorations of persistent funding. And he mostly got his way on school funding as well. From John Myers:

The proposal, which still must be put into actual bill form by week’s end, gives legislative Democrats from both houses a smattering of their priorities, from money for mental health programs to new dollars for career technical education and a new scholarship program aimed at college students from middle-class families.

For the governor, the budget includes most of what he wanted in a major education funding plan to earmark money for disadvantaged students.  The proposal tinkers with, but retains the structure, of the formulas first demanded by Brown in January — including extra cash for school districts with higher concentrations of poor and English learner students. (John Myers / News10)

There are still plenty of smaller details to work out, but the budget is looking like it will be passed on time for a third straight year. It is no coincidence that it has been three years since the majority vote ballot measure was passed.

On the other hand, this budget is far from all that could be desired from a progressive standpoint. There are big holes that should be filled sooner rather than later. We are still leaving some of our most vulnerable Californians without the services that they desperately need. We are still underfunding the supposedly co-equal judicial branch. We are still underfuning health care services.

The budget uses Brown’s more conservative estimates of revenue over the LAO’s estimates of $3B extra, but perhaps that caution could lead to a more sustainable future for state services.

Business funded poll has some otherwise predictable results

by Brian Leubitz

The business roundtable is pretty much exactly what you would think it is: a business, right-leaning group that wants lower taxes and job growth.  So, it is no surprise that in their recent poll, almost 79% of Californians think taxes are too high. Now, there are a lot of ways to ask that question, and the results are somewhat confusing considering a strong majority voted for Prop 30 to raise taxes.

But some of the other data is more useful, including some evidence of support for the Governor’s education agenda:

* 54.5%, including 68.3% of Latinos support the governor’s proposed education funding plan to allocate additional money to school districts with higher populations of high-needs students;

* 56.4% support the Governor’s current budget proposal to send an additional $2.9 billion to California schools, including $1 billion in one-time funding to help schools implement recently adopted academic standards. (CBRT)

Now, I think this poll is best viewed in a larger context of other data, and that will come soon enough. However, for now, the Governor appears to be on the right track.

LAO thinks more cash is coming than  Gov. Brown

by Brian Leubitz

In his negotiations with the Legislature, perhaps Gov. Brown would prefer to bargain over less money and pocket any extra revenues that fall into the general fund over the course of the fiscal year. But alas, the LAO thinks that the bigger sum should be in discussion:

Legislative Analyst Mac Taylor projected state revenues Friday that are $3.2 billion higher than those projected by Gov. Jerry Brown this week in his revised budget proposal.

The difference translates into $400 million for the current fiscal year and $2.8 billion for the year that begins in July. The projection sets up a potential battle between Brown and fellow Democrats in the Legislature. who want to spend more than he proposes.

Both Brown and Taylor urge fiscal restraint, however, because revenue projections are largely dependent upon economic factors ranging from employment to housing prices. Both also agree that the bulk of the money will go to schools under state law.(SacBee)

Taylor is generally in favor of taking the cautious approach, so that’s no surprise. But acknowledging the extra cash will surely mean that the fight is more intense from legislators that are looking to restore funding for some of the state’s programs. Social services, the judiciary, higher education and other interests are competing with the Prop 98 K-14 funding guarantee, and the fight will be typically intense. This LAO report will only add intensity.

Speaker Pérez outlined his budget goals at a speech to the Sacramento Press Club, here is the audio of the opening to that speech:

Brown looks long-term on impending climate crisis

by Brian Leubitz

Gov. Brown, in this go-round as governor, has hardly been spending willy-nilly. Now he says that he has another reason:

“It doesn’t look like the people who are in charge are going to do what it takes to really slow down this climate change, so we’re going to have to adapt, and adapting is going to be very, very expensive,” Brown said. “That’s another reason why we have to maintain some budget discipline.”

Brown, who has urged lawmakers of his own party to resist spending despite the state’s improving revenue outlook, said weather is “becoming more intense” as a result of climate change and will “cost a lot of money and a lot of lives.”(SacBee)

Now, I actually find this pretty persuasive. Climate change will hit California particularly hard. Drought and fires will be increasingly common. Our fertile Central Valley will not be so fertile when we have no water for what is basically a semi-arid climate. Snowpacks will cease to become good water reserves as they melt too early in the season. In short, Gov. Brown was probably underselling the costs of adaptation to climate change.

That is not to say that we shouldn’t be continuing to work to slow climate change. We need to rethink our fossil fuel usage, and how we are assisting in that dependence. (Ahem…for starters: fracking and LNG pipeline) And yes, planning for budgeting long-term to address the changes inherent in catastrophic climate change should be part of the overall adaptation process. That being said, it would be interesting to see how money is being specifically directed towards that planning.

Controller’s report shows big gains

by Brian Leubitz

A while back, I mentioned the (mostly) good news on the revenue front. Today, the controller’s office released the full numbers, and again they are (mostly) good.

Personal income taxes in the month of January came in $4.8 billion above (54.7 percent) monthly estimates contained in the Governor’s latest budget proposal. Corporate taxes came in $11.4 million above (45.5 percent) those monthly estimates, and sales tax receipts came in $582.7 million below (27%) projections.

The State ended the last fiscal year with a cash deficit of $9.6 billion. As of January 31, that cash deficit totaled $15.7 billion and was covered with $5.7 billion of internal borrowing (temporary loans from special funds), and $10 billion of external borrowing.

Of course, the big caveat here is that the sales tax numbers were below projections pretty substantially. Also, because of the fiscal cliff, many companies changed pay schedules, resulting in some of these bigger numbers. Of the numbers, Controller Chiang had this to say:

“Last month’s revenues were by far the highest that California has seen in any January for the past decade. Along with increased auto sales, rising home values, and more construction, it signals that California may be entering an era where we can govern outside of crisis. However, given our state’s troubled history with boom-or-bust revenue cycles, this good news must be tempered with increased fiscal discipline in how we interpret and budget January’s collections.”

This seems to be the path that the Legislature and the Governor are content to pursue. A steady budget with no big increases planned.