Brown's plan, which was leaked on Wednesday night and posted
online, proposes spending $106.8 billion from the state's general
fund, and sets up a $1.6 billion rainy day fund, according to a copy
posted on the Internet by the Sacramento Bee and confirmed to
Reuters by an aide to a top Democratic lawmaker.
While the plan would increase general fund spending in the state's
next fiscal year — by $8.3 billion, or 8.5 percent — it does not
include many programs pushed by his fellow Democrats.
"Economic expansions do not last forever," Brown said in a draft
introduction to the document, which includes a dramatic graph
showing wild swings in the state's finances over time.
Healthcare advocate Anthony Wright, who said he was briefed on the
budget proposal Wednesday night, expressed disappointment that
despite the state's economic recovery, Brown is keeping many
recession-era cuts in place.
"They are still moving ahead with a 10 percent cut to one of the
lowest Medicaid rates in the nation," said Wright, executive
director of Health Access California. "It's disappointing we're
continuing to see many of the health and human services cuts from
the depths of the recession."
At the same time, the plan proposes increasing spending on
politically popular kindergarten-12 education to $61.6 billion from
$55.3 billion as part of a new way of funding public schools that
shifts extra dollars to districts with large numbers of students who
are poor or do not speak English.
The document makes no mention of a plan supported by Democratic
leaders of the Assembly and Senate to provide public
pre-kindergarten classes to all 4-year-olds in the state. State
Senate President Darrell Steinberg, who this week called publicly
for Brown's support, did not comment on the omission.
Brown's budget plan proposes $154.9 billion in spending from all
state funds, which includes the general fund, special funds and
Brown's office declined to comment on the leaked report, but aides
moved quickly to reschedule the governor's budget presentation for
Thursday morning instead of Friday as planned.
Among other programs, the budget will include $64.7 million to help
pay for a program to make driver's licenses available to
undocumented immigrants. The funding includes salaries for 822 staff
Brown's proposed budget increases spending by about 4 percent for
Medi Cal, the state's version of the Medicaid healthcare program for
the poor and disabled, and no longer calls for a retroactive
reduction of fees paid to doctors. But the governor's program of
fiscal restraint still includes a 10 percent cut in medical fees
going forward, which healthcare experts have said would lead many
physicians to refuse to accept Medi Cal patients.
The plan also proposes using $250 million in funds raised through
California's carbon trading program to support the state's planned
high-speed rail system, which has run into legal problems and rising
[to top of second column]
Brown ended a decade of budget deficits in June by signing a
spending plan for the current fiscal year with a surplus to help the
state set aside $1.1 billion in reserve.
California's revenue has been on the upswing as its economy
gradually improves and since Brown rallied voters in 2012 to approve
temporary increases to the state sales tax and personal income tax
rates for the wealthy.
Revenue from taxes on the wealthy's capital gains have figured
prominently in the state's stronger revenue, which the Legislative
Analyst's Office in November said could leave the state with a $2.4
billion reserve for the current fiscal year — more than double the
Brown administration's estimate.
The reserve could climb to $5.6 billion in the next fiscal year
assuming the state's current fiscal policies do not change, the
Brown's budget plan notes that California's finances, while
improved, face several challenges, including $354.5 billion in
long-term liabilities. That includes unfunded pension and other
retiree health liabilities of $217.8 billion.
Stock market volatility could also hurt California as an estimated
9.9 percent of its general fund revenue in the fiscal year beginning
in July is expected to rely on capital gains.
The governor said the state also needs to continue paying back
internal loans and making good on deferred payments it used to help
balance its books in previous years.
The cost of that budgetary borrowing has been reduced from $34.7
billion to $24.9 billion this fiscal year and Brown aims to take it
down to $13.1 billion in the next fiscal year and wipe it out in the
following fiscal year.
As part of that effort, Brown wants to fully pay off the Economic
Recovery Bonds the state issued in 2004 to help tackle budget
deficits with an extra $1.6 billion payment.
Two of three major credit rating agencies whose opinions influence
California's borrowing costs have cited California's improving
finances in upgrades to its general obligation ratings over the past
(Reporting by Jim Christie in San Francisco; Sharon Bernstein in
Sacramento; editing by Lisa Shumaker)
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.