Despite growing revenue, Calif. governor shrinks budget proposal

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Despite reports of increased income tax revenue in the first four months of the year, Gov. Jerry Brown May 14 proposed a $96.4 billion general fund budget - $1.3 billion lower than the one he issued in January. The "May revise" kicks off weeks of negotiations with the legislature.

Hopes had been building among millions of Californians who have suffered from repeated cuts in human services that with the higher tax revenue and the victory last November of a temporary tax on high incomes to fund education, some cuts could be restored.

But Brown disappointed them, and set up potential tensions with Democratic legislators now holding two-third majorities in both houses, as he cautioned about weak global economic growth and federal actions including the sequester.

"This is not the time to break out the champagne," he said, warning that some of the $4.5 billion increase in revenue comes from taxpayers who shifted income from 2013 to 2012 to avoid higher federal tax rates.

Among the highlights:

  • More funds for K-12 and higher education, including money to implement Common Core State Standards for English and math - a move praised by the California Teachers Association, which also commended the governor's proposed increase in funds to school districts with high proportions of English learners and other disadvantaged students.
  • No new funds for childcare, which has suffered repeated cuts in recent years. The move was sharply criticized by human services advocates who note that nearly one-fourth of California's children live in poverty - the highest rate in the nation.
  • A continued two-year limit on cash grants and work assistance for adults, with some additional funds for county-run case management programs and to subsidize employers who hire welfare recipients. CalWORKS recipients now receive a maximum of $638 per month for a family of three, significantly below the "deep poverty" level, and have no cost-of-living increases.
  • A very small increase in funds for In-Home Supportive Services for the elderly and disabled - another area that has suffered repeated cuts in recent years.

Not surprisingly, Republican legislators praised Brown's budget, with Republican Assembly leader Connie Conway calling it "realistic" and saying the legislature must "resist the temptation to blow through the surplus using one-time money for ongoing programs."

Democrats were more guarded, with Senate president pro tem Darrell Steinberg agreeing about the need to pay down debt and build a reserve, but adding, "It's important that we also begin making up for some of the damage done to tens of thousands of Californians." Assembly Speaker John Pérez commended Brown's commitment to maintaining fiscal stability, and promised a thorough review of the governor's proposals.

Human services advocates also weighed in.

Anthony Wright, executive director of the Health Access coalition, commended Brown for "progress" from previous proposals to expand Medicare under the Affordable Care Act, but warned that steep cuts would continue to Medi-Cal (state Medicare) benefits and provider rates. Wright also said the governor's plan to cut county health funds would undermine the safety net that covers those who would still be uninsured.

Vanessa Aramayo, director of the California Partnership coalition of human service providers, said that with poverty in the state having jumped from 16.3 percent to 23.5 percent during the Great Recession, "it's time to address our poverty crisis and restore, rebuild and reinvest in California's future."

The California Budget Project noted that the May Revision would contribute $1.1 billion to a reserve fund, which it called "a worthwhile investment in periods of economic growth, but funds that might wisely be directed elsewhere at a time when millions of Californians are still hurting." CBP also said repaying the general fund's debt to state special funds could be slowed down.

CBP cited restoring subsidized child care and preschool places, repealing a proposed 10 percent cut to Medi-CAL providers, and strengthening CalWORKS as three places such funds could be allocated.

Photo: Marilyn Bechtel/PW

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