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Brown’s Budget: Calif. Rebounding With Tax Hikes

Evening Edition

Above: Carl Luna, a professor of political science at Mesa College, talks to KPBS about Governor Jerry Brown's 2013 budget.

Riding a wave of new tax revenue, California's spending plan for the coming fiscal year will rise by 7 percent, a powerful indication that the state that came to symbolize fiscal mismanagement during the heart of the recession is emerging into brighter days.

Aired 1/10/13 on KPBS Midday Edition.

Guests

Carl Luna, Professor of Political Science, Mesa College

Ben Adler, Capital Public Radio Bureau Chief

Transcript

Gov. Jerry Brown on Thursday proposed a $97.6 billion general fund budget for the 2013-14 fiscal year that wipes out years of deficits and even includes a modest surplus.

The additional revenue hiked the spending plan by $6.3 billion over the current year and helps the governor pour more money into public schools and universities.

The state's budget shortfall stood at $25 billion when Brown took office two years ago.

"California today is poised to achieve something that has eluded us for more than a decade - a budget that lives within its means, now and for many years to come," Brown said during a news conference at the Capitol.

A rebounding economy coupled with new revenue from the higher sales and income taxes voters approved last November have put the nation's most populous state on a healthier financial trajectory as it begins to turn the corner on an era of deep budget shortfalls and spending cuts to core state programs.

California's persistent budget woes came to represent the plight of states struggling through the recession as tax revenue declined steeply, leaving governors and state legislatures around the country little choice but to consider deep cuts or unpopular tax increases.

Brown took both approaches. He pushed an austerity message that forced cuts throughout state government during his first two years in office while persuading California voters to approve increases to the state sales tax and on income taxes on high-income earners.

Despite the new revenue flowing in, Brown has warned his Democratic colleagues who control both houses of the state Legislature that they must not overplay their hand and spend too freely. The governor wants to build a reserve fund for future downturns to help smooth the type of boom-and-bust budget cycles that have become chronic in California. "And I'm determined to avoid the fiscal mess that the last few governors had to deal with," Brown said. "The way you avoid it is by holding the line, by exercising a common sense approach to how we spend our money."

His budget contains an $850 million surplus.

Brown wants to focus the additional spending on public schools. His budget includes $2.7 billion more for K-12 education, which will account for 57 percent of general fund spending.

Among Brown's priorities is creating a new education funding formula. It would be aimed at giving school districts more control over spending and directing state money to the neediest children and poorest districts.

His proposal is expected to run into opposition from lawmakers representing more affluent regions of the state, but Brown said the state should spend proportionally more on students who have "disproportionate challenges."

"Growing up in Compton or Richmond is not like it is to grow up in Los Gatos or Beverly Hills or Piedmont," he said of his redistribution plan. "It is controversial, but it is right and it's fair."

Spending cuts are still expected in some areas, such as the courts, while health care programs and social services are expected to see no increases in spending. The state's two four-year higher education systems, the University of California and California State University, each will receive $250 million more.

California's general fund spending hit a high of $103 billion before the recession decimated the state's economy and severely cut tax revenue for the state and municipalities. It dropped to a low of $87 billion during the 2011-12 fiscal year, requiring lawmakers to make deep cuts in a wide array of state services, including K-12 schools, higher education, the court system, and social services for the needy and disabled.

Comments

Avatar for user 'astrofan'

astrofan | January 11, 2013 at 9:23 a.m. ― 1 year, 8 months ago

I give up. How is spending more money we don't have "seeing brighter days"? We still have tens of billions in unfunded pension obligations. We're going to blow billions on a "high speed" train to nowhere. We still spend almost double per prisoner than any other state. We still have whored out, to the state union leaders, politicians. And now we have, shudder, an unstoppable Democratic state legislation. Oh yeah, things are just great.

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Avatar for user 'casualobserver'

casualobserver | January 11, 2013 at 10:02 a.m. ― 1 year, 8 months ago

Isn't it amazing what a little increase in taxes does to eliminate budget deficits? Despite all the right wing blabber about how lowering taxes is the path to Nirvana the reality, on both the state and federal level, is that when taxes are higher the economy and life in general are better It ain't rocket science; do the math. The boom times, whether under under Reagan or Clinton, were times of significantly higher tax rates. Yes, California does still have substantial unfunded obligations. California has been on a downward spiral since the tax reductions brought about by Proposition 13 some 30 years ago and has been playing a robbing Peter to pay Paul budgetary plan ever since.

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Avatar for user 'mccolgan55'

mccolgan55 | January 11, 2013 at 1:29 p.m. ― 1 year, 8 months ago

How much does Governer Brown's budget reduce the debt of the billions and billions in proposition costs? As I understand it, it barely covers the minimum required payments. That is like paying only the minimum on your personal credit card. Read your statement. If that is all you do it will take decades to pay off your debt and thousands in additional cost. This is not a balanced budget this is a copout.

Keep this in mind when you are told that a proposition will not increase your taxes. Of course not, they are never paid off, just the required minimum interest is paid in Brown's budget.

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Avatar for user 'wesbaker00'

wesbaker00 | June 3, 2013 at 12:35 p.m. ― 1 year, 3 months ago

Prop 13 is needed when you have run away government robbing the average citizen. The democratic right wing nuts want to tax and spend their way out like Europe, but Europe is broke! California was a beacon of light in the 70’s & 80’s because they allowed people and business to function with little to no red tape. Look at Texas how they function today which is very similar to California in the 70’s & 80’s. If we lower taxes and remove the red tape, then we will find that California has a lot to offer businesses. This in return will allow us to pay our debt obligations, or should I say the “union feed bribes”.

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