Brown’s revised budget somewhat better than expected
(Calif.) Suggesting federal fiscal policy poses a greater threat to the state budget than an ebbing of the economy, Gov. Jerry Brown released a revised budget plan Thursday that overall will add little new spending, while also avoiding major cuts.
After warning in January that the state faced a significant risk of economic decline, Brown’s updated outlook seemed to concede that job growth, housing and consumer confidence remained strong in the state. Still, that perspective was still not enough for him to open the purse strings.
“Over the past four years, California has increased spending by billions of dollars for education, healthcare, childcare and other anti-poverty programs,” Brown said at morning news conference inside the Capitol. “In the coming year, I don’t think any more spending will be possible–and the reason is very simple. We’ve got ongoing pressures from Washington, and the economic recovery isn’t going to last forever.”
That said, there is some good news for K-12 schools. Brown is proposing to fund the Proposition 98 guarantee at $74.6 billion in 2017-18, which is about $1 billion more than his plan in January. Part of his plan would be to suspend requirements under Prop. 98 for how much schools should get during descending economic growth.
Saying revenue numbers are turning out better than he thought they would at the start of the year, Brown has also dropped plans to impose a payment deferral of $860 million on schools this summer.
The uneven pace of tax collections for most of the first half of the fiscal year also prompted the governor in January to propose reducing the Proposition 98 guarantee being paid out this year by about $500 million. That claw back is no longer part of his budget proposal.
With the exceptions of those changes, Brown’s revised plan closely resembles what he proposed for public schools in January.
There had been some expectation that the governor would come forward with a fiscal restructuring plan for special education. He said in January that he wanted to convene stakeholder meetings and hinted at a shakeup that would revise state laws that currently requires local educational agencies to join regional oversight organizations Special Education Local Planning Areas, which essentially control how money to support students with disabilities is distributed–both federal and state.
Brown reported in the May document that those meetings have been held and that his staff “will spend additional time in the coming months examining these issues to chart a path forward that will maximize resources to serve students while increasing transparency and accountability.”
The other major policy proposal from January was aimed at imposing greater oversight of the use of school construction bond money. Brown wanted to create new audit requirements.
Thursday, the governor reported that his facility program was progressing and that he would propose legislation requiring independent verification that bond funds had been spent properly.
Although the revised May budget will be the baseline that school boards statewide will use for building their own spending plans for next year, there are some fiscal experts who believe additional money may still be forthcoming before July.
Because many Wall Street traders have anticipated that President Trump and the GOP-controlled Congress would come to an agreement on tax reform, the payment of capital gains taxes has been uneven almost all year.
April, typically the state’s biggest month for tax collections, ended well below estimates, but the drop made little sense in the context of the stock market’s record advance. Thus, some believe that the revenues lost in April could be made up or even added to in June.