California governor to reveal spending plans as revenues increase

[May 14, 2015]  By Sharon Bernstein
 
 SACRAMENTO, Calif. (Reuters) - California Governor Jerry Brown will reveal how he plans to spend an unexpected $3 billion jump in the state's revenues on Thursday, a windfall that has set up intense jockeying for funding among state agencies, advocates for the poor and others.

The governor's annual May revision of his budget, meant to reflect changes in the economy since plans were first announced in January, comes as social services agencies say they are starved for funding after cutbacks during the economic downturn, while water suppliers hope for funds to build reservoirs and wastewater recycling facilities amid ongoing drought.

Brown, a fiscally moderate Democrat, has held the line on spending despite improvement in the state's financial condition, insisting on socking away prior surpluses in a rainy day fund and paying down debt, to the frustration of many in his party, who would like to restore drastic cuts to social services made during the recession.

By law, much of the $3 billion in additional revenues will go to education and to the state's rainy day fund - priorities with which the governor agrees, said Brown spokesman H.D. Palmer. He said paying down debt was another priority.

Brown will address issues related to the state's catastrophic drought, which is entering its fourth year, and climate change, Palmer said.

He will also provide an update on expenditures related to the state's prison system amid reforms aimed at reducing the number of inmates to comply with court orders to ease overcrowding as well as recent changes in state laws that reduce sentences for some non-violent crimes, Palmer said.

On Thursday, advocates for the poor plan to hold a rally after Brown's speech demanding more funding for social services. Republicans also plan to issue a formal response to the governor's proposal.

Brown will need to negotiate with state lawmakers over his plan, which must be passed by the Democrat-controlled legislature by the end of June to take effect in July.

In January, Brown proposed a budget for the 2015-2016 fiscal year that included $113.3 billion in expenditures from the state's general fund.

(Additional reporting by Robin Respaut in San Francisco; Editing by Ken Wills)

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