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California Governor Calls $113B Budget Precariously Balanced

Photo credit: California Governor's Office

Gov. Jerry Brown talks to reporters at the state capitol, April 29, 2014.

California Gov. Jerry Brown on Friday released a record $113 billion state spending plan that shores up its rainy day fund and boosts education. The budget also sustains existing funding levels for nutrition, welfare and health spending at the county levels. And it begins to repay local jurisdictions money the state borrowed during the recession.

Assembly Speaker Toni Atkins said the first repayment will amount to more than $23 million for San Diego County's general fund. Cities throughout the region will also see repayments.

Atkins said she's pleased the governor's cautious spending has helped knock out debt and restore education cuts. But Atkins said she'll work to strengthen the social safety net in budget talks.

"Even though we're seeing more jobs and we are seeing a lower unemployment rate, not everyone has come back," Atkins said. "There are still people who are suffering in California. So part of the budget process is to really push forward some of those programs."

Outgoing San Diego Hunger Coalition Executive Director Jennifer Tracy said she hopes Supplemental Security Income, also known as disability, is one of the programs to get attention. Californians receiving the benefits saw major cuts to their monthly checks during the recession. Payment rates haven't returned to pre-recession levels, nor have there been cost of living adjustments.

"To pretend that we can simply ignore Supplemental Security income recipients and expect that somehow this trickle-down theory is going to work for them really ignores reality," said Tracy, who is leaving the Hunger Coalition to be with family in Oregon. "We do want to see investments in education and other anti-poverty programs, but this is another effective and efficient way to address poverty in our community."

San Diego Regional Chamber of Commerce President and CEO Jerry Sanders praised the governor for his prudence.

"The Chamber commends Governor Brown on his commitments to paying down debt, strengthening the state's rainy day fund and investing in infrastructure, while holding the line on tuition hikes in higher education and not increasing taxes. We look forward to working with his administration this year."

San Diego Assemblyman Brian Jones (R-71) released a statement calling for job growth incentives. Brown's budget increases job-readiness training and adult education for low-income and unemployed Californians, but does not offer much else to the business community.

“In the past 5 years, since being elected to the State Assembly, California’s General Fund spending has increased by $26.8 billion ... With the amount of new regulations and laws put on the books each year in our state, it is no surprise that California continues to have the highest poverty level in the nation. Instead of increasing spending year after year, we need to focus our priorities on reforming our tax structure to make it possible for businesses to hire more workers, or pay their current workers a higher wage. Investing in education coupled with incentives for businesses to hire, or stay in the state for that matter, needs to be California’s highest priority.”

But Brown's budget does draw a bold line in the sand when it comes to spending on higher education. Brown told the University of California to do more with less so the nation's largest public university system can avert tuition hikes.

Brown said he didn't provide as much funding as the 10-campus system wanted because California's budget is already stretched by debt payment and growing costs. His decision sets up a higher-education standoff that won't likely be resolved for a while as Brown and legislative leaders craft a budget in the coming months.

"It's precariously balanced, and it's going to get even more challenging as we get down the road," Brown said.

The Democratic governor provided a $120 million boost, not as much as the university requested. Brown defended his proposal, saying that's "not chump change" because other departments received no increases.

UC Regent George Kieffer on Friday took a wait-and-see approach. "It's too early in the process to draw any conclusions about the final budget," Kieffer said.

UC's board of regents late last year approved raising tuition by as much as 5 percent each of the next five years unless the state devotes additional support above the roughly $2.8 billion it provided for the year. UC President Janet Napolitano has said the amount the governor has budgeted is inadequate to maintain the quality of the universities.

The threat of hikes motivated hundreds of students to protest across UC campuses from Los Angeles to Berkeley, where higher education was once free and fees have historically been below the national average.

RELATED: UCSD Students Protest Tuition Hike Proposal

Brown and legislative leaders have proposed various solutions. Brown said he is proposing an advisory committee for his administration and the university to work on reducing costs by reviewing the degrees each campus offers, improving degree-completion times and negotiating pension reform.

He has also suggested offering more online classes, requiring faculty members to devote more time to teaching instead of research and curbing salaries for administrators and professors.

Under the state's new spending plan, the general fund will increase about 5 percent from the current $107.4 billion budget, reflecting California's economic momentum. The governor, however, did not propose many new programs but instead focused on covering growing costs to existing programs. Brown said the state already has made massive financial commitments to health and human services and education.

"We saw the boom and the bust, and I'm trying to avoid that," he said Friday.

Brown noted that about 4 million more people are enrolled in the state's low-income health care plan, Medi-Cal, as compared with 2012. The administration is mindful that President Barack Obama's executive order to spare some immigrants from deportation will enable hundreds of thousands of low-income immigrants in California to apply for the state's version of Medicaid. While the president's action excludes immigrants who came to the country illegally from qualifying for federal health benefits, California has a policy of using state money to provide health coverage for low-income immigrants with deferred-action status.

The governor is facing renewed pressure from members of his own party to increase assistance to welfare, health care, child care and other social programs related to concerns about income inequality as the state enjoys a second year of surplus.

Republicans, whose votes are not needed to pass a budget, have said they support the governor's plan for saving the reserve, but they have criticized him for failing to provide an economic strategy for job growth. Brown's budget includes funding for workforce development through adult education and technical training programs.

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