There is a looming budget battle developing in the State Capitol, but it's not your usual partisan Democrat versus Republican fight. This time Democrat on Democrat scuffle over what the state's budget priorities ought to be.
Recently, Governor Jerry Brown and Speaker John A. Perez unveiled competing budget proposals for Fiscal Year 2014-15. Speaker Perez's “Budget Blue Print for 2014-15” provides a wish list of new or expanded government programs he would like to fund, while Governor Brown recognizes that California's is on uncertain economic footing and needs to begin paying down its long-term debt.
Both proposals advocate reinvesting in K-12 and higher education which I support. The Governor's budget projects a $9.7 billion revenue increase over the 2013, 2014 and 2015 budget years from Proposition 98. The Speaker's budget remained supportive of increasing higher education funding yet lacks a game plan.
I am pleased to see the Governor's plan begins to address our state's extreme debt load. Brown advocates allocating $11 billion in new debt repayment, to immediately repay over $6 billion in school district deferrals and to eventually pay off the “wall of debt” by 2017-18.
The surge in revenue to the state is due to two phenomena: the temporary tax increases from Prop 30; and the stellar year in the stock market. This means the increase in revenue is fleeting.
Clearly our state's economy continues to struggle and Brown supports targeted spending to try to encourage job creation. The Governor plans to spend over $1 billion on new infrastructure for water, transportation and “green” modernization projects. The budget also calls for $500 million in school and community college maintenance.
I'm frustrated that the Governor continues to support his High Speed Rail Project (HSRP) boondoggle. Brown calls for taking $300 million in “Cap and Trade” tax dollar revenue and applying it to the rail project. I believe this is in violation of both AB 32 (2006) and Prop 1A, which established the bullet train project.
Families save for rainy days and government should do the same. Brown calls for a $1.6 billion rainy day fund and the figure is far below what the non-partisan Legislative Analyst's Office (LAO) recommends. But this is a positive first step.
Right now the voters are scheduled in November 2014 to decide if the state should have a spending limit and rainy day fund. This was a bi-partisan agreement from 2010 when the Legislature passed Assembly Constitutional Amendment 4 (ACA 4). Speaker Perez wants to unwind that deal and it appears Brown wants to modify it to a less stringent formula.
The Assembly Democrats budget blue print creates an unstable rainy day fund with a portion of capital gains tax revenue being saved and they would eliminate giving the voters an opportunity to weigh in on the ACA 4 spending cap.
While I am supportive of developing a new rainy day fund, the level of savings is not high enough and could be damaged again when Proposition 30 revenue expires. In 2012 voters approved Proposition 30, which temporarily increases personal income tax and sales tax and is projected to give the state $40 billion in revenue. The Assembly Democrat blue print never addresses how to prepare for the expiration of the temporary taxes in Prop 30. Under Prop 30 the sales tax increase will expire in 2016 and the personal income tax will expire in 2018. Even though I am a freshman, I've been in Sacramento long enough to know Assembly Democrats will try to make these onerous taxes permanent.
Furthermore, Sacramento leaders need to understand our past mistakes so we avoid repeating errors. The Governor will be investing a majority of increased spending this year to pay down debt, but we will see a 5 percent increase in welfare grants which equates to $168 million, the funds for this expansion will come out of the general fund.
Last year I was shocked by the lack of transparency during the budget process and how a document so important was negotiated behind closed doors with no real public input. I hope for greater public dialogue this year as we are at a fork in the road heading toward a pathway to fiscal solvency or down the road of “politics as usual.” Although not a perfect budget, I'm ready to stand with the Governor and to reach out to my colleagues on the other side of the aisle who support fiscal stability to confront the special interests who want to spend your money in an irresponsible manner.
California families are depending on us.