Some changes from May proposal
State legislators approved a fiscal year 2017-18 budget last Thursday, the deadline before they would have to forfeit their salaries. The budget follows closely the outlines of Gov. Jerry Brown’s May revision, but several major changes to the $125 billion budget were enacted, including a few items that do not directly affect state expenditures.
In announcing the agreement, Brown said in a press release, “This budget keeps California on a sound fiscal path and continues to support struggling families and make investments in our schools.”
Support for the budget was bipartisan, although Republicans expressed concerns about some portions of the budget. For example, Sen. Jeff Stone’s statement after its passage characterized the party’s mixed feelings.
“While there are some things to like in this budget, including adding to the state’s ‘Rainy Day Reserve’ and restoring the middle-class scholarships the governor had proposed cutting, overall the people of California deserve better.”
Then he added, “Once again, this year’s budget includes hefty pay raises for state workers. Meanwhile. Legislative Democrats have passed an onerous gas and car tax that will hurt the poor and working families. This new tax, signed by the same governor who vowed not to increase taxes without a vote of the people, is supposed to fix California’s crumbling roads.”
Among the budget bill’s highlights is the expansion of the earned income tax credit to help the self-employed and workers earning up to $22,300 a year, which could increase the take-home pay of 1 million more people in the state.
Funding for the state’s schools will increase $3.1 billion. Also, funding for higher education will expand capacity for California students and hold the University of California more accountable for implementing changes.
Funds from Proposition 56, which was approved in November and raises the tax on cigarettes, will be used to increase payments to doctors and dentists who see Medi-Cal enrollees. However, this provision is subject to both the Trump administration approving the provision and not reducing Medicaid payments to California.
As the governor has stressed since his election, the state must prepare for another economic downturn. This budget adds $1.8 million to the “Rainy Day Fund,” which brings its total to $8.5 billion. Also, the Legislature is going forward with the governor’s proposal to double the state’s CalPERS payment this year in order to lower future contributions.
Several non-budgetary issues also are included in the legislative package. These include modifications to the laws overseeing recall of elected officials. This was done in response to the effort to recall Sen. Josh Newman (D-Fullerton), who voted for the gasoline tax increases.
The recall papers seeking signature support suggest it would place repeal of the tax on the ballot, which his supporters argue is misleading.
Also, the state will abandon the Board of Equalization and create two new tax agencies, one which must be ready to operate on July 1. The new departments — one to collect taxes and the other to hear disputes from taxpayers — would report to the governor’s office instead of to an elected board.
State Controller Betty Yee, who is an ex officio member of the BOE, said in a release, “Without equivocation, the need to fundamentally overhaul the Board of Equalization is dire. The sweeping reform passed today takes the duties of BOE down to the studs and structurally remodels to ensure more consistent, fair, transparent, and efficient administration of California’s tax laws and appeals.”