Gov. Jerry Brown proposed a $122.6 billion budget for the fiscal year beginning July 1. That is a $6.6 billion increase over the current-year budget.
“This budget, relative to budgets of the last decade and half, is in good shape,” Brown said during his press conference.
Education continues to be a budget priority and this year, Brown has put forward a five-year plan for improving the state’s infrastructure, the growing Medi-cal coverage and the Rainy Day Fund.
While revenues are expected to grow by $3.8 billion, Brown emphasized the cautious nature of his proposed budget. Referring to the $27 billion deficit five years ago, Brown wrote in his transmittal letter, “It is clear that fiscal restraint must be the order of the day.”
Pointing out that the current economic recovery is already two years longer than the average, Brown stressed the fiscal prudence of his proposed budget. If a middle recession were to occur, Brown’s staff estimated a $55 billion drop in revenues over the next three years.
“If new, ongoing commitments are made now, then the severity of cuts will be far greater — even devastating — when the recession begins,” the budget summary said.
Consequently, another $2 billion was added to the Rainy Day Fund, which Proposition 2 established and whose goal is 10 percent of annual General Fund revenue.
At the end of the current fiscal year, the RDF balance is expected to be $4.5 billion (37 percent of the target). Without any adjustment, the balance would be $6 billion at the end of fiscal 2016-17, but Brown proposal would bring the total to $8 billion or two-thirds of the goal.
On Monday, Jan. 11, the Assembly’s Legislative Analyst’s Office issued a preliminary report commenting on the governor’s budget proposals. It said that the governor’s plans for reserves was an important priority and wrote, “We believe this general approach is prudent as a large budget reserve is the key to weathering the next recession with minimal disruption to public programs.”
Educational funding, authorized by Proposition 98, will increase $2.4 billion for a total of $71.6, almost 50 percent greater than the total five years ago.
The federal Affordable Care Act, implemented through Covered California, has grown Medi-Cal substantially. While federal funding will pay for much of the current costs, future costs will become the state’s responsibility, Brown acknowledged.
This, as well as continuing the tax credits for earned income — first implemented this year — will help low-income residents.
The governor’s new program focuses on state infrastructure, particularly roads and transportation, but includes other programs such as the State Parks and Cal Fire.
Brown estimates that total deferred maintenance approaches $77 billion. This plan would invest $55 billion in infrastructure projects over the next five years. More than 90 percent will be directed to transportation projects. For this fiscal year, a total of $807 million will be allocated to begin to address deferred maintenance projects. Of the total, $289 million will be directed to the state’s community colleges, $60 million for parks and Cal Fire will receive $8 million.