Governor Proposes ‘Carefully Balanced’ Budget

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Governor Edmund G. Brown Jr. today released what he described as a “carefully balanced” budget plan for 2015–16 that allocates portions of increased state revenues to schools and health care while holding the line on other areas.

Throughout today’s budget press conference, the Governor reiterated his resolve to avoid the “boom and bust” pattern of past budgets.

“There’s only so much money,” the Governor said in response to one question, adding, “The liabilities are far exceeding the surpluses.”

Highlights of the Governor’s proposed 2015–16 budget, as outlined in his news release:

  • Invests in water, flood protection and combating climate change. In addition to $532 million from the Proposition 1 water bond to continue implementing the administration’s five-year Water Action Plan for sustainable water management, the budget proposes spending the last $1.1 billion from the 2006 flood bond. It also proposes $1 billion in cap-and-trade expenditures for the state’s continuing investments in low-carbon transportation, sustainable communities, energy efficiency, urban forests and high-speed rail.
  • Implements rainy day fund and pays off debt. According to the Governor’s office, the state’s Rainy Day Fund will have a balance of $2.8 billion by the end of the year. The budget spends an additional $1.2 billion from Proposition 2 funds on paying off loans from special funds and past liabilities from Proposition 98; repays the remaining $1 billion in deferrals to schools and community colleges; makes the last payment on the $15 billion in Economic Recovery Bonds borrowed to cover budget deficits from as far back as 2002; and repays local governments $533 million in mandate reimbursements.
  • Increases K-12 school spending by $2,600 per student compared to 2011–12. Rising state revenues mean that the state can continue implementing the new Local Control Funding Formula ahead of schedule, the Governor’s office reports. When the formula was adopted in 2013–14, funding was expected to be $47 billion in the coming budget year; the 2015-16 budget proposal provides nearly $4 billion more—$50.7 billion.
  • Commits funding from Proposition 30 to hold tuition flat for college students. The $762 million in increased funding is provided contingent on tuition remaining flat.
  • Provides more than $1.2 billion in funding to expand workforce training—supporting a coordinated framework for adult education, career technical education, workforce investment and apprenticeships. These funds are intended to provide training and education to workers in California so they can develop the skills they need for self-sufficiency and greater personal advancement.
  • Provides Medi-Cal health care coverage to 12.2 million Californians. The Governor’s office said the expansion is due mainly to implementation of the federal health care reform act and that the program now covers 32% of the state’s population.
  • Prefunds retiree health care. The state’s unfunded liability for retiree health care benefits is estimated at $72 billion, with state health care benefits for retired employees remaining one of the fastest growing areas of the state budget. The Governor proposes that the state and its employees share equally in prefunding retiree health benefits, to be phased in as labor contracts come up for renewal.

The full summary of the Governor’s budget proposal is available at www.ebudget.ca.gov or www.dof.ca.gov.

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