Here are some reactions to Gov. Jerry Brown's May budget revision:
Assembly Speaker Toni Atkins:
The Governor's revised budget provides a solid starting point for the final phase of our deliberations. I am particularly pleased the Governor has built upon the framework Assembly Democrats proposed for a STRS solution earlier this year. That, and the Rainy Day Fund we are poised to pass this week, are two great steps forward to ensure California's economic stability. As we finalize the budget over the next few weeks, we will also look to expand opportunity by combatting child poverty, improving access to higher education, increasing funding for transportation projects, and taking strides to expand affordable housing. Based on the Governor's May revision and the more than 50 hearings the Assembly has already held, I am confident we are on track for another on-time, balanced budget - one that will help solidify the state's fiscal position for years to come.
Republic gubernatorial candidate Neel Kashkari:
Once again, Jerry Brown is crossing his fingers and hoping for a roaring stock market to deal with California's unfunded liabilities. Hope is not a strategy. We need honest leadership and realistic forecasts to bring Californians together to solve our long-term fiscal challenges and rebuild the middle class.
Assembly Republican leader Connie Conway, R-Tulare:
I am pleased to see Governor Brown once again show great caution in his revised budget plan. Fiscal responsibility must continue to the state's guiding budget principle, even with this year's one-time tax windfall. Time will tell if the Governor can get his fellow Democrats in the Legislature to embrace this same spirit of spending restraint as we work toward a final budget proposal.
It should be a wake-up call to all Legislators that almost our entire surplus is being eaten up by spending for government health care, welfare and pension costs. These fast-growing programs will consume more and more of the state budget and eventually reduce the amount we can spend on other important priorities such as education, public safety and transportation.
I am hopeful that we can build upon the progress of the bipartisan rainy day fund agreement to enact an on-time budget that protects funding for classrooms and public safety, uses the windfall responsibly to invest in one-time needs like transportation infrastructure, and makes further progress in paying down California's budgetary debt.
Chief Justice Tani G. Cantil-Sakauye:
The Governor's revised budget is encouraging because it identifies additional funding and recognizes the need for fiscal stability with a creative proposal for a two-year budgeting formula for the trial courts. I also appreciate the Governor's continued confidence in the statewide leadership of the judicial branch. I'm launching my blue ribbon commission on the future of the courts later this year and I believe this initiative dovetails with the Governor's desire that the judicial branch identify further efficiencies to promote access to justice.
As I outlined in my budget blueprint earlier this year, the trial courts will require a reinvestment to provide adequate services for court users. I look forward to working with the Governor and the Legislature before the adoption of the Budget Act to ensure that all Californians have access to justice.
Senate Republican leader Bob Huff, R-Diamond Bar:
I am glad to see the governor is continuing to prioritize fiscal responsibility. Spending restraint has been our mantra for years. I appreciate that he borrowed heavily from Republican proposals like the rainy day reserve, paying off our debts and addressing unfunded liabilities like CalSTRS. The governor has been pretty responsible thus far with his budget plans, and any unanticipated tax revenues must go to reducing that mountain of debt.
Certainly the state budget is on more solid ground, and we are not debating spending cuts and more taxes. That's because the voters approved a $45 billion tax increase that was intended for education and public safety. But it doesn't look like that's where all of the money is going.
This is not an austere budget by any stretch. The governor proposes to increase spending by $12 billion over last year's budget. That's probably more than we should be doing right now. One thing is clear - there is no budget 'surplus' in California. When you have identified over $340 billion of state debt and unfunded liabilities, as the Legislative Analyst has, you cannot claim to have surplus revenues. That debt load is nearly $9,000 for every single Californian.
One of our biggest concerns is that he is still pushing High Speed Rail when it's obviously a massive boondoggle. This is going to be a drain on taxpayers for decades or longer. His call for 'doubling down' on it by using Cap & Trade funding is a losing proposition. The Legislative Analyst has said it is legally risky to link the bullet train to the cap-and-trade fund.
The use of Cap and Trade taxes for unjustified purposes will hurt our economy and result in more job losses. Our energy costs are already among the highest in the nation and we don't need people paying an extra $1 a gallon for gas right now - or ever.
Finally, this budget fails to do enough to help counties deal with the ongoing problems from his public safety realignment. The evidence of a significant threat to our communities is mounting and we shouldn't wait for a catastrophe before we fix it.
Overall, I think this is a pretty good budget plan and I hope the Democrats don't undermine the effort to be fiscally responsible by adding billions in pork spending. Their special interests are ramping up the rhetoric for more spending increases, and it is an election year. Democrats operate Sacramento under one-party rule and it's up to the governor to hold the line against his party. Otherwise, Democrats will bear full responsibility if they repeat their past mistakes and take California back into budget deficits.
Assemblywoman Kristin Olsen, R-Modesto:
The Governor's Budget revision includes much stronger allocations for a rainy day fund than he had proposed in January, which I am very pleased to see. Over the past few weeks the Governor and Democrat leaders have worked with Republicans to draft a ballot proposal that I am proud to co-author, as it will allow us to truly save money in reserve so we can pay down debt and so that we can avoid deep budget cuts and steep tax increases when the next economic downturn arrives. This negotiation process has been encouraging, and I look forward to participating in the debate as we move forward toward the ultimate success of this measure.
While I'm very pleased that our negotiated Rainy Day Fund is included in the Governor's revised budget, I was surprised and disappointed that he didn't address other important priorities - water storage and drought relief, higher education, and other investments to help grow our economy. Reserve savings alone will not revitalize our state; we must invest in our infrastructure and in the education of our youth in order to grow jobs and opportunities that will allow us to reclaim our status as the Golden State.
Sen. Andy Vidak, R-Hanford:
Governor Brown is still on the wrong track. He is wasting hundreds of millions of taxpayer-dollars on High-Speed Rail and violating promises made to voters when they approved the bond to fund it.
California Community Colleges Chancellor Brice W. Harris:
We applaud Gov. Brown's continued commitment to help more students attend California community colleges and succeed. The additional funding for career technical education will help colleges enhance, retool, and expand workforce education programs that are regionally focused to better address labor market needs. After years of trimming career technical education programs because of budget cuts, this $50 million increase will translate into more skilled workers and economic growth.
Board of Equalization member George Runner:
The Governor is on the right track in proposing a budget that has no new taxes, contains ongoing expenses, pays down debt and begins to address the state's growing pension costs.
I just wish the Governor would repeal the fire tax and stop the bullet train.
In addition, California continues to rank as the worst state to do business in an annual survey of business leaders.
The next test for the Governor will be how he deals with legislators who want to raise taxes and spend billions more. Will he hold the line?
Assemblyman Bob Wieckowski, D-Fremont:
The Governor's May Revise is a reflection of the economic growth and turnaround California has experienced in the past four years. Instead of facing a $26 billion deficit like we did in the Governor's first year, our state is in a much stronger position to meet the challenges ahead. Through tough, but necessary savings and some targeted investments in key areas, we are now well positioned for the state's fourth on-time budget in a row.
Restoring some vital services now can go a long way toward helping more people share in the prosperity our state is seeing and provide them with more opportunities in the future.
I applaud the Governor's decision to better fund the teachers retirement pension system, but I believe we should move more aggressively to restore the deep cuts that were made to the Judicial Branch. More than 50 courthouses and 205 courtrooms have closed across the state, forcing parties, law enforcement, witnesses and jurors to travel longer distances just to have access to justice. The proposed $160 million for trial court funding is still less than half of what the third branch says it needs to avoid further cuts. While our courts should always seek ways to operate more efficiently, additional savings will fall far short of the $336 million that is needed to make them operate smoothly and provide the access to justice all Californians deserve.
Bill Wagner, president of the American Council of Engineering Companies of California:
The American Council of Engineering Companies of California strongly endorses the Governor's plan for Cap & Trade expenditures. The Central Valley has become an impoverished region, riddled with poverty and high unemployment numbers.
We support the Governor's vision of a high speed rail system that will reduce air pollution and climate change greenhouse gases, while enhancing economic opportunities statewide through connectivity. ACEC California applauds the Governor's staunch leadership on the HSR; with his leadership, there is substantial positive momentum that will fulfill our vision of California's future transportation needs.
Elizabeth Landsberg, director of legislative advocacy, Western Center on Law and Poverty:
California needs Governor Brown to apply the same skills he used to bring the budget in line to helping the poor get out of poverty. We need the Governor to focus on the least fortunate Californians so that our state no longer has the highest poverty rate in the nation. Health coverage is critical, but is not the social program. It doesn't pay rent or buy food.
Sen. Anthony Cannella, R-Ceres
The Governor's revised budget shows necessary restraint in spending, allowing us to continue to pay down debt. As we see our revenues rise, we must remain focused on addressing our long term challenges. The Governor correctly pointed out the extreme fluctuations that have come from capital gains and the dangers of using those funds on new spending.
I applaud the Governor for highlighting our unfunded liabilities. We must have a plan that makes serious inroads so that they do not continue to grow. It is our responsibility to address this issue now so that our next generation does not have to pay for our inability to spend within our means.
Assemblyman Frank Bigelow, R-O'Neals
Governor Brown's focus on paying down debt and working with Republicans to pave the way for a rainy day fund are needed steps in the right direction. In particular, the bipartisan rainy day fund compromise will help ensure that the state has money to help pay for core priorities and emergencies during future economic downturns.
However, our work is far from over. The nonpartisan Legislative Analyst's Office recently released a report detailing at least $340 billion in outstanding state retirement, infrastructure and budget liabilities. This debt needs to be paid for now. Furthermore, the Governor continues to move forward with a costly high-speed rail project whose cost has just risen by another $1 billion. If the Governor is truly committed to fiscal responsibility, he would ditch high-speed rail and make the paying down of long-term debt a bigger priority.
Sen. Jim Nielsen, R-Gerber:
The Governor should be commended for proposing to set aside $1.6 billion for the Rainy Day fund; and to pay down $11 billion in debt but this is a mere 3 percent of the state's $340 billion debt. Unfortunately, his budget also includes increased spending on permanent programs that will inevitably take us back to deficit spending.
More money needs to be set aside for the Rainy Day Fund and for emergencies like wildfires, natural disasters and public safety. State revenues are forecast to increase by $2.4 billion. While this appears to be good news, this is a veneer generated by a temporary tax that was promised for education and public safety; and will expire in three years.
The high speed rail from Merced to Bakersfield is a boondoggle not worthy of precious taxpayers' dollars. In the coming months, the Legislature must rectify the Governor's failure to help counties protect their citizens by providing more funding for realignment. Counties need money for rehabilitation, inmate housing and supervision, and court costs.
The administration is releasing the second class of realignment prisoners, making our communities more dangerous. State leaders shouldn't wait for a catastrophe before we fix this ill-conceived program.
Matt Cate, executive director of the California State Association of Counties:
California's counties understand and respect the Governor's fiscal prudence in putting much of the available surplus into paying down debt and establishing a robust rainy day reserve fund. We greatly appreciate that the Governor saw the value and benefit of proposing a repayment of $100 million to local agencies for mandate reimbursements that are more than a decade old.
Seventy-three percent of that revenue will be directed to counties as general purpose revenues. We also remain steadfast in our commitment to providing the programs and services to criminal offenders now under county jurisdiction as a result of AB 109, Public Safety Realignment. The scope of these new responsibilities is significant, and we are seeing a growing intersection between criminal justice and mental health.
The criminal offenders now being housed, supervised, and treated at the county level often need intensive mental health services, substance use disorder treatment programs, as well as job training and housing assistance. Additional resources will help counties meet these needs in ways that increase public safety, decrease prison admissions, and result in better outcomes for the offenders and our communities.
We will continue working with the Governor, his staff and the Legislature to make sure they are aware of our resource needs to more fully address this issue.
C. Duane Dauner, president/CEO of the California Hospital Association:
The California Hospital Association (CHA) is disappointed that the May revision to the state's proposed 2014-15 budget, released today, does not reverse looming retroactive Medi-Cal payment cuts to hospital-based skilled-nursing facilities. This omission comes at a critical time in the evolution of the Medi-Cal program.
Administration officials announced this morning that an estimated 11.5 million Californians - nearly 1 out of every 3 people - are expected to be enrolled in Medi-Cal during the coming year. Yet, the payment cuts to hospitals, along with those affecting physicians, dentists, pharmacists and other providers, may threaten access to care for millions of low-income and elderly patients.
The May budget revision includes a net increase of $2.4 billion in revenues due to higher than expected personal income tax withholding, partnership income, and dividend income. Administration officials, however, said that the increased costs in Medi-Cal resulting from the surge in enrollment, along with expenses related to the drought, and a plan to fund teacher pensions will consume all of the expected revenue growth. Additionally, the state's new "Rainy Day Fund" and a plan to make payments on the state's outstanding debt will consume 3 percent of the state's 2014-15 revenues.
California voters will have the chance this fall to secure billions in federal dollars for Medi-Cal patients. But as California's budget picture continues to improve, lawmakers should do their part by restoring specific cuts that protect the most vulnerable among us, and preserve a basic quality-of-life issue: access to quality health care for all.
Dr. Paul Song, executive chairman of CourageCampaign.org:
Much to our dismay, Governor Brown's revised 2014 budget still refuses to acknowledge that 9 million Californians (25%) currently live in poverty, the highest poverty rate in the nation. California already has a rainy day fund, and it's called the Health and Human Services Budget.
Reducing poverty, providing opportunity and support for struggling families, and fostering education are the only real ways to grow a robust economy that can survive the next economic storm. The governor emphasized improvements in healthcare for the poor, which is certainly important, but you can't eat healthcare. Healthcare doesn't pay the rent.
Moreover, instead of funding HHS programs that would grow the economy, the Governor has chosen to throw another $500 million down what he himself has called the "rat hole" of incarceration, while funding for key prison rehabilitation programs has inexplicably been cut in half compared to the governor's initial proposal in January.
Courage Campaign and our 900,000 members dearly hope the Legislature will push back on the Governor and convince him to re-invest in our communities still devastated by a decade of disinvestment.
Assemblyman Jeff Gorrell, R-Camarillo:
I am pleased that the Governor's budget represents a responsible framework," stated Assemblyman Gorell. "But while revenues continue to be above previous projections, more than half of the surplus is immediately absorbed by skyrocketing costs caused by the Federal Affordable Care Act. These dramatic increases in healthcare costs indicate that there are many unanswered questions in the implementation of the Affordable Care Act. While the spending is guaranteed to increase in future years, the surplus revenue is not.
It is expected that revenues will be $2.4 billion above projections, but the increase in MediCal costs due to California's implementation of the federal Affordable Care Act would be $1.4 billion.
This budget clearly emphasizes the need to enact a strong rainy-day fund which will protect surplus revenues for the lean years. The passage of this bi-partisan effort will clearly be the most important work we do this year to protect California's fiscal future.
The governor also continues to focus money from the carbon tax auction to the high-speed rail project, an inappropriate and probably unconstitutional use of those resources. If Governor Brown wishes to commit to a responsible budget, he needs to give up on high speed rail.
Assemblyman Eric Linder, R-Corona:
The Governor's May Revision can be applauded for the establishment of a Rainy Day Fund on the November ballot with a dedicated reserve -- a concrete step toward our state's financial well-being. As a Co-Author of that legislation, I am eager to see it go before the voters.
But there is much work still to do. The Governor has not yet prioritized for highway safety and infrastructure maintenance, and part of our state's debt elimination should include a comprehensive plan to restore transportation funding. I look forward to working with my colleagues to address all the challenges California must overcome and not ignore.
Assemblyman Jim Patterson, R-Fresno:
While California continues to borrow and spend, the fundamentals of our state are crumbling. We are paying the highest taxes in the nation, businesses are fleeing, our students cannot afford to pay for college, and our roads and highways are falling apart--yet we continue to borrow for a bullet train and expand Medi-Cal for California's bloated version of Obamacare.
Instead of taking our $340 billion "Wall of Debt" head-on and paying it off as soon as possible, Governor Brown wants to make the minimum payment. The Legislative Analyst's Office was right when they said spending $11 billion dollars on our debts this year isn't nearly enough. This budget revision is just a mirage. It presents a rosy picture but ignores serious details.
Assemblyman Kevin Mullin, D-South San Francisco:
I appreciate the Governor looking at the budget using a multi-year perspective. I agree with the idea that as we look ahead, it is important to remember that in most of the last ten years we have faced big shortfalls. As a member of the Assembly Budget Committee, I will be taking that to heart.
At this point, it goes without saying that revenue volatility is a chronic problem in our state budgets. The negotiated agreement on the rainy day fund will set aside significant revenues for leaner years. This is a very positive step towards increased fiscal stability.
Reimbursing local governments for costs associated with mandates is long overdue. Local governments are tasked with implementing critical public safety policies and I support the Governor's proposal to begin paying back these costs.
One glaring omission is the continued lack of funding for affordable housing. The Governor's infrastructure financing districts proposal is a woefully inadequate replacement for the loss of redevelopment funds for housing. The legislature must step up and provide a stronger alternative.
I am pleased that the Governor has decided to begin to address the CalSTRS unfunded liabilities this year. The longer we wait the more costly it will get and this problem has been left unaddressed for too long.
As we have improved the safety net, particularly in the area of healthcare, our additional expenditures have increased at the same rate as the new revenues. We in the legislature will really need to focus and balance our priorities if we are going to make the legislative proposal to implement universal pre-k work.
Access to justice is obstructed when there are long lines for court services and closed court rooms. The Governor's two-year strategy to stabilize trial court funding will allow the Chief Justice and the Judicial Council to evaluate the current system, modernize processes and improve access to justice.
Raising California Together:
California's rebound will only be as good as the foundation we create to sustain it; to position California to take on the challenges of the future, there is no better investment than the growing minds of our youngest learners: children ages 0-5.
Unfortunately, the budget plan released today ignores the reality that unequal access to early learning opportunities drives California's persistent achievement gap and threatens to leave millions out of the state's touted economic rebound.
Access to quality early learning is key to leveling the playing field and making a real difference in the lives of students with the greatest need. Children who are English learners or come from low-income families can't afford to miss out on the key early education that arms them with the strong foundation needed to keep up in kindergarten and beyond.
Preparing young minds for the challenges of school is fiscally prudent; every dollar spent on K-12 education will stretch further when students start ready to learn on Day One.
At the same time, with access to high quality child care, more working moms and dads can earn paychecks that go back into our economy, and go to work knowing their children are safe and learning.
The Raising California Together coalition looks forward to working with California leaders to ensure every Californian child has the opportunity to succeed in school and life, regardless of their zip code or the size of their parents' paycheck.
Sen. Tom Berryhill, R-Twain Harte:
There is no surplus in California's so-called surplus. Last week's report by the Legislative Analyst Office pretty much lays it out - we are in deep debt down the road - yet, I hear calls from my legislative colleagues for more spending on almost every program in the budget.
Rather than new spending let's get rid of the fire tax and any other taxes or fees unfairly placed on some communities when the economy was bad. The last thing we need is more spending adding to the real crisis that will occur 10 to 20 years from now, when our kids are saddled with crippling debt.
Assemblyman Rob Bonta, D-Alameda:
I am very pleased Governor Brown has followed the Assembly's lead and is taking on the challenge of finding a solution to the CalSTRS funding issue this year rather than put it off for another year as he originally proposed.
Based on the most recent numbers. CalSTRS has a shortfall in funding of approximately $74 billion and will run out of funding for the program by 2046 if no changes occur.
Assemblyman John A. Pérez, D-Los Angeles:
Much of the Governor's proposal reflects the hard work done by the Assembly to tackle one of the most urgent long-term fiscal challenges facing California. The solution we enact must be balanced and comprehensive, reflecting our commitment to shared responsibility over the long-term that achieves 100 percent funding for CalSTRS and ensures California's hardworking teachers will have the retirement they've earned.
My colleagues and I are confident in the leadership of Speaker Atkins, Senate Pro Tem Steinberg and Governor Brown to pass a comprehensive, balanced solution as we move forward in the budget process.