By James Carter
California Black Media
Despite $2.4 billion in unexpectedly higher revenues, California Governor Jerry Brown stressed spending restraint Tuesday when he detailed his revised state budget proposal.
According to Brown, the two-year tax revenue gains are offset by increased spending, specifically higher Medi-Cal costs and state worker retirement liabilities.
"We must follow a policy of restraint," Brown said. "Arguing with reality is a very chancy endeavor. The reality is the numbers that I've laid before you: Revenues are up a couple of billion but expenditures meet the revenues almost precisely. And that's the problem."
Last week a report from the Legislative Analyst's Office stated California is facing $340 billion in long-term costs that are not being adequately addressed. The largest percentage of those costs relate to a nearly $74 billion shortfall in the teacher pension fund. Because the contributions are mandated by state law they do not automatically adjust to ensure proper funding. If contributions are not increased, most estimates expect the fund to run out of money in approximately 30 years.
"People are concerned about young people getting what they need," Brown said. "To get what they need, they need teachers. Teachers get what they need by having pensions. The pension has to be paid for. There will only be pensions in 30 years if we start laying aside money."
Ongoing and uncertain healthcare costs are another major component of California's fiscal state.
Brown said that as people were being recruited to sign up for the federal Affordable Care Act, many people who previously were not participants in the health care system discovered they were eligible for Medi-Cal, the state's low-income healthcare program.
"30-percent of the people in California are now getting health coverage under our Medi-Cal program," Brown said. "That is a huge social commitment on the part of the taxpayers of California. I'm proud we did it but we have to take into account that it is growing. Since January the costs of this Medi-Cal enrollment has gone up $1 million. What are the unknown increases the next year and the year after that? That is why we have to be very careful with how we look at spending claims."
Brown's long-view approach to tackling California's economic troubles are winning some support from the other side of the aisle. Senate Republican Leader Bob Huff, R-Brea, is guardedly optimistic about the steps and directions Brown has taken with the budget.
"I think the governor outlined a fairly fiscally conservative budget, so he is trying to acknowledge and pay down debt," Huff said. "It's hard to call this an austere budget given that it's $12 billion more than last years' budget. But given the demand for so many programs up here I would have to say that the governor's drawn a pretty strong line of fiscal restraint."
The question is whether that strong fiscal line will be able to hold up under the intense pressure from outside groups and other legislators who want to see funding restored to programs and services cut during the recession and expenditures for new programs.
One such new program is Senate President pro Tem Darrell Steinberg's, D-Sacramento, proposal to expand transitional kindergarten statewide. The program, introduced as part of the Steinberg's Kindergarten Readiness Act, provides classes and a modified curriculum to four-year-olds who miss the cutoff date for kindergarten enrollment because their birthdays fall later in the year.
Advocates of the transitional kindergarten program site statistics and studies showing the improved academic outcomes among children who attend pre-school versus those who don't. While they may agree on the academic benefits, for opponents the clear consideration is cost. If fully funded Steinberg's program could cost an estimated $1.46 billion.
When asked about the transitional kindergarten proposal Tuesday, Brown, who previously warned lawmakers about using budget surpluses on new spending, showed no signs of support.
"A lot of people have various views on the education system," Brown said. "In California we have K through 12 and two years of community college. Some people say if we just get a sixteenth year everything will be hunky dory for the next 50 years. If that's true then some reallocation has to be made within that 15-year Prop 98 program."
Brown's fiscal conservatism combined with legislators looking to satisfy constituent groups seeking a larger slice of the economic pie could make for interesting debates leading to the June 15 budget deadline.
"The truth is there are many good ideas in health care in schooling in environment, in prison reform, in court expansion, but we only have so much money. we do live within the revenues given," Brown said. "This budget is my best cut at how to spend the money. This is taking a big bite out of our long-term obligations. The Legislature will now go over it and we'll have a good conversation about what we do."