Local Government
Commentary: Brown’s Final Budget Reflects Cautious Approach

Commentary: Brown’s Final Budget Reflects Cautious Approach

By Dan Walters.

Roy Bell, who was Jerry Brown’s first budget director 43 years ago, called it a “dog-and-pony show” and it’s one of the Capitol’s longest-running rituals.

Each January, usually on the 10th, journalists who cover the Capitol file into a first-floor room dedicated to news conferences and settle into fiberglass swivel chairs that would command high prices at an auction of mid-century modern furniture.

Thereupon, the governor and his finance director reveal a proposed state budget for the fiscal year that would begin six months hence.

Brown’s first budget for the 1975-76 fiscal year was quite modest by contemporary standards, $11.5 billion, and was contained in a thick sheaf of loose leaf pages bound with brown shoelaces.

On Wednesday, Brown proposed the 16th and final budget of his record-long gubernatorial career – two eight-year stints separated by 28 years of doing other things – aided by his current budget director, Michael Cohen, who was a toddler in 1975.

It totals $190.3 billion, more than 16 times Brown’s first – but according to historic data maintained by Cohen’s staff, would spend roughly the same percentage of Californians’ personal income as it did 43 years ago, a bit less than 8 percent.

That remarkably stable number underlies one of the budget’s political axioms: Most of it is on autopilot, governed by statutory formulas, constitutional law (especially school spending), federal aid and other immutable factors.

Therefore, the annual political wrangling over the budget involves only its relatively tiny margins.

This year’s version of marginal conflict involves roughly $5 billion in revenue beyond what was earlier forecast.

Brown, as is his wont, warned anew Wednesday that California is overdue for a recession that, in combination with a tax system highly dependent on a handful of rich taxpayers, would hit the budget hard – an estimated $20 billion per year loss of revenue.

“Fortunately, we haven’t hit that recession yet, but we will,” Brown told reporters to explain why he wants to use the extra money mostly to fatten the state’s “rainy day” reserve, raising it to $13.5 billion.

That intent runs counter to hopes of his fellow Democrats in the Legislature to spend more, particularly on health care, early childhood education and other entitlements that would be difficult, if not impossible, to cut if revenues fall.

“This is about steady-as-you-go or exuberance followed by pain,” said Brown, who is obviously determined to leave the state’s fiscal house in better order than the deficit- and debt-riddled situation he inherited from predecessor Arnold Schwarzenegger – or that he bequeathed to successor George Deukmejian in 1983.

Brown 2.0 has been fairly careful with the taxpayer’s buck. While spending has increased sharply, from $130.9 billion in 2011-12 to a proposed $190.3 billion for 2018-19, it has actually dropped fractionally in relation to personal income.

There is, however, a caveat on that largely positive appraisal. The unfunded liabilities for public employee pensions and health care have expanded by tens of billions of dollars during his watch and Brown has addressed them only tepidly.

Those obligations will weigh heavily on the next governor, as will the inevitability of an economic downturn, since the recovery from last decade’s Great Recession is already historically long.

Furthermore, as Brown was reminded by one of Wednesday’s reportorial questioners, the Democrats vying to succeed him this year have been courting liberal voters by promising all sorts of new and expensive programs if elected, largely mirroring what Democratic legislators want.

Brown acknowledged Wednesday that he’s been lucky to have an expanding economy and an electorate willing to enact higher taxes. His successor may not be as fortunate.

Originally posted at CALmatters.



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