Brown Cautious in 2016/17 Budget Proposal

Channeling philosopher George Santayana (“Those who cannot remember the past are condemned to repeat it”), Gov. Jerry Brown presented his budget yesterday looking to the future by considering the past. Warning that budget writers “put out of their minds” thoughts of recessions that could cripple state budgets, he vowed not to repeat past mistakes of building budgets that cannot be sustained in difficult economic times.

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Brown offered a chart that showed the rollercoaster budgets over the last decade-and-a-half with big budget hits from the dot-com bust and the mortgage crisis. Brown said using the budget history as a template, his team predicted the effects of another budget shortfall, which could happen soon. The average economic recovery period is five years, the governor said, and California is well beyond that point now.

Presenting a chart that showed recent deficits in the red, to prevent future large deficits Brown said, “If you do what I want” there would be less red on a chart during the next recession.

Warning legislators against creating new programs that will continually require state funding—even if the ideas behind the programs are noble — Brown said, “Too many goods, too quickly, become bad.”

Will Brown’s warnings be heard by legislators?

Maybe. With the change in the term limit law, legislators will have more time to serve in the capitol. Actions they take now they would have to live with in the coming years (as long as they are re-elected).

Still, majority Democrats and interest groups plan to test the governor over budget priorities. Brown seemed prepared to confront new demands. “This is not a candy store that you can pick out what you want.”

Some groups would not bother with debating issues in the legislature but are planning to take their proposals to the voters via the initiative process.

Governor Brown was asked about a number of proposed initiatives. While he said he did not want to comment on initiatives, he did, dropping boulder-sized hints of what he was thinking on some prominent potential ballot measures.

On the Proposition 30 income tax extensions, Brown cited a “fatal flaw” in the measure by stipulating that none of the tax revenue collected by the tax extension would end up in the rainy day fund. (Brown’s budget is adding $2 billion to the fund bringing it up to 65% of its constitutional mandate.)

The governor in response to a reporter’s question said that Prop 30 could make a future budget deficit worse because the tax measure relies so heavily on high-end income taxpayers, who see great drops in their capital gains during recession.

On the minimum wage, the governor pointed out that because the state increased the minimum wage a dollar on the first of the month, the budget had to set aside an additional quarter-of-a-billion dollars from the General Fund to cover state workers. Should the $15 dollar-an-hour minimum wage ballot proposal become law that would cost the state an additional $4 billion. The money has to come from somewhere, Brown said.

Addressing the $9 billion statewide school bond already qualified for the General Election, Brown said much of the money would end up with affluent school districts. It is not well targeted, he said, arguing that the legislature can do a better job than the “developers” who put this together.

Originally published by Fox and Hounds Daily