On May 14, Gov. Jerry Brown announced revisions to his proposed 2015-16 state budget, boosting the General Fund expenditures to a total of $115.3 billion, an increase of $6.7 billion.
“The state is definitely on a rebound from just a few years ago when the state was mired in red ink,” Brown said at his news conference releasing the revised budget proposal. “The finances of California are stabilized. Just since January, several million dollars came in the state treasury.”
Much of the increased revenue will go toward educational programs, pursuant to Proposition 98, enacted in 1988. Funding for K-12 schools and community colleges will increase $5.5 billion for a total allocation of $68.4 billion. Funding for K-12 is nearly $10,000 per student, a $3,000 or 45 percent increase over 2011-12 levels when $47.3 million was distributed under Prop 98.
In combination with the growth in Medi-Cal spending, which is now supporting 12 million people, a 50-percent jump, Brown emphasized, “ … the fundamental of what government is supposed to do — health and education — that’s the focus of our spending.”
Last week, the Legislative Analyst’s Office released its comments on the May revised budget. The LAO estimates that the combination of personal income, corporate, and sales and use taxes will be $3.1 billion more than the governor’s projection for the current fiscal year.
Regardless of whose revenue estimates are more accurate, voter-approved propositions 2 (November 2014) and 98 (approved in 1988) earmark most of the growth to reserves and educational spending.
Consistent with his promises to protect future funding, Brown proposes to set aside $3.8 billion, an increase of $633 million, in the state’s Rainy Day Fund. Total state reserves will be $4.6 billion compared to $3.4 billion in the January plan.
The May revision also maintains flat tuition for California undergraduates at the state’s universities.
Recognizing the depth and extent of the recent recession, Brown also is proposing to use $380 million for an earned income tax credit, similar to the federal tax credit. If the legislature enacts this proposal, residents earning less than $6,580 with no dependents or $13,870 with three or more dependents will benefit. Matching 85 percent of the federal credit will provide households a minimum savings of $460 and a maximum of $2,653.
The budget also repays money to local schools and local governments, which the state borrowed more than 10 years ago to balance the budget.
Funding to improve the state’s water problems, since the drought began four years ago, will go toward various infrastructure water projects, including enhanced recycling. Most of this money comes from the water bond approved in November 2014. The 2015-16 budget proposal uses about a third of the $7.5 billion approved as part of Proposition 1, the water bond.
Part of the drought-response funding provides $1.4 million to the State Water Resources Control Board for enforcing water-use restrictions and more inspections of diversion facilities.
The governor has maintained the $62-million emergency drought funding for Cal Fire, which was part of his January budget proposal. The budget also includes $6.1 million to replace an air tanker.
Other increases in the May revision, which will have a local impact, are for the literacy and English acquisition program and the state’s broadband project for local libraries, according to Idyllwild Librarian Shannon Ng.
Although current-year and next year’s budget projections are rosy, both the governor and the LAO warned the legislature that this situation could turn around quickly because of the fragile nature of the national economy. State revenues are very volatile since they rely greatly on income and sales taxes.
“A recession is on the way; it’s around the corner. It’s coming,” Brown stressed. “We take what we have and spend it prudently.”
