Brown’s cautious outlooks buoys support for Prop 30 extension
(Calif.) With his financial experts predicting another economic recession in the near future, Gov. Jerry Brown is keeping a tight rein on state revenue, adding little in the way of new spending in his May budget revision, instead squirreling away reserves to save for tough times.
Brown’s updated budget plan, released last week, deviates little from his January proposal and does not rely on new taxes that voters are being asked to approve this November to help avoid cuts to education.
The governor, who is remaining neutral on the campaign to extend sales and income tax hikes he sold to the public in 2012 as temporary, said that if the measure fails, there will be cuts and that even if it passes, the budget will barely be balanced.
Exactly why, say proponents of the ballot initiative, the measure is needed to avoid cuts to academic programs.
“The state’s revenue projections and the governor’s comments make it clear, if we do not pass an extension of the income tax rates, our state will be forced to make significant cuts,” said Jennifer Wonnacott, campaign spokesperson for the California Children’s Education and Health Care Protection Act.
“We must maintain the current tax rates on the wealthiest Californians to prevent billions of dollars in funding cuts for public education, health care and other essential programs,” Wonnacott said. “California students, schools and colleges can’t afford to go back to the days of teacher layoffs, larger class sizes, and cuts to programs.”
According to the governor’s May revision, “By 2019‐20, the annual shortfall between spending and revenues is forecast to be over $4 billion. This shortfall does not take into account the likelihood of an economic slowdown or recession. The emerging shortfall is in large part — but not entirely — due to the expiration of the temporary taxes imposed under Proposition 30.”
Brown led the campaign for Proposition 30, which imposed a half-cent sales tax increase and personal income tax hikes on the state’s wealthiest wage earners for five years. The revenue brought in from the initiative – some $7 billion annually since 2012 – was used to stave off huge cuts to education programs in the wake of the Great Recession.
This November, the state’s voters will be given the choice to extend the Proposition 30 income tax rates for another 12 years.
New taxes or not, the governor’s budget proposal will now be debated by Legislative leaders whose own spending priorities may conflict with Brown’s.
The state Senate has sought $2 billion to build permanent housing units for the homeless, and the legislative women’s caucus wants $800 million to increase rates paid to child care providers while extending care to more families.
Despite a surprise dip in April revenue collections, the overall budget for K-12 schools remains rosy. If the governor’s plan is adopted as proposed, per pupil spending will have increased by more than $3,600 over the spending provided during the nadirs of the recession.
The minimum funding guarantee of $71.9 billion for 2016-17 represents a 52 percent increase over the past five years. His plan would also bring the state to within 4 percent of the commitment made four years ago with the creation of the Local Control Funding Formula.
Even before news broke of April’s slip in personal income tax revenue, the administration had signaled to schools that there would not be a lot of additional spending proposed for new programs or services.
The governor did, however, acknowledge the growing teacher shortage that is putting education gains at risk, proposing in his May revision a $10 million package of tuition support and other incentives aimed at attracting young people into the profession.
Brown also once again withheld support for a statewide bond to help with school construction and repair costs, but offered a $100 million loan program for health and safety improvements.
The governor, becoming renowned for his tight-fisted spending policies, referenced the need to be cautious in the face of economic uncertainties.
“Our reserves are not adequate,” Brown said during the press conference at the Capitol. “But at least it will minimize the cuts to all the programs that people want to spend more money on now, and what I’m trying to do is to protect those programs in the event of the next recession, which is coming.”
The May revision also provided new details for an early learner initiative Brown proposed in January.
The plan consolidates a number of existing resources to form a $1.6 billion Early Education Block Grant, which will align academic priorities between pre-kindergarten programs and local school districts.
According to the implementation plan:
• School districts, county offices of education, families, teachers and community stakeholders will work to develop a regional early learning plan in order to align pre-kindergarten and K-12 programs; and
• County offices of education and school districts with early education programs can aid school districts that lack the infrastructure to operate such programs with technical support.
Preparation for program implementation should begin in 2017-18.
Brown also wants to respond to the troubling trend within the teacher employment sector – characterized as the position losing status among young people enough so that shortages are visible in many communities.
As a number of bills are pending in the Legislature to address the problem, Brown proposed a $10 million General Fund one time investment for grants to California postsecondary institutions to improve upon or develop four-year integrated teacher credential programs. Grants of up to $250,000 would provide postsecondary institutions with funding to improve existing or create new integrated programs.
Preference would be given to proposals that include partnerships with local community colleges and K-12 local educational agencies. The competitive grant program would be administered by the Commission on Teacher Credentialing, with the funds primarily provided for release time for faculty, creation of courses, summer scholarships for students, and program coordinators. Both public and private universities would be eligible to compete for the grants.
Brown’s $100 million loan program for facility needs would be administered as a boost to the district emergency repair program. Under the May Revision, school districts facing imminent and critical health and safety facility issues can receive temporary funding through a one-time, bridge loan program.
The governor’s proposal comes as builders and school groups have already qualified a $9 billion facilities bond for the November ballot – debt that Brown has warned against taking on. But with state support for school construction nearly depleted, expectations are that the entire cost of new schools will fall on local developers.
Other adjustments in Brown’s May revision include:
• Higher property tax revenues will offset a $211.3 million decrease in Prop 98 General Funds for school districts in 2016-17;
• Under LCFF, Average Daily Attendance income for schools will increase $11.2 million in 2016-16 and decrease $2 million in 2016-17 due to an increase in ADA in 20145-15;
• Based on projected ADA growth estimates, select categorical programs will face a decrease of $5.7 million under the Prop 98 General Fund; and
• Assuming 100 percent participation, the K-12 Mandated Programs Block Grant will receive an additional $131,000.