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SCV legislators respond to proposed $108 billion California budget

Posted: May 13, 2014 5:26 p.m.
Updated: May 13, 2014 5:26 p.m.

California’s tax windfall lifted Gov. Jerry Brown’s spending plan to a record level Tuesday, but the Democratic governor cautioned that the surplus is needed for higher-than-expected health care costs and an underfunded teachers’ pension system.

The governor is projecting $107.8 billion in spending from the general fund, the state’s main account for paying day-to-day operations, bringing total state spending to $156.2 billion for the fiscal year starting July 1. That’s $1 billion more than the general fund plan Brown proposed in January.

The figure represents a 24 percent increase over the $87 billion general fund budget approved during the 2011-12 fiscal year, the low point of the recession when California cut billions of dollars from state programs and furloughed state workers.

“I can tell you this is good news for California,” Brown told reporters Tuesday.

Tax revenue in the current fiscal year is running more than $2 billion ahead of expectations, but the governor’s office said expenditures increased at a similar rate.

California can expect about $1.2 billion in additional costs this year for Medi-Cal, the state’s health insurance program for the poor, which saw 1.4 million more enrollees than the state projected in January. Brown’s office said the additional cost will climb to $2.4 billion in the next fiscal year as even more people enroll due to an expansion under the Affordable Care Act.

The Brown administration had projected 10.5 million people would enroll in Medi-Cal in the 2014-15 fiscal year but now projects 11.5 million will be covered.

Republicans applauded the governor for striking a cautionary tone. But Assembly Minority Leader Connie Conway, R-Tulare, said she’s concerned by the increase in health care expenses.

“It’s a chunk of money that we were told we weren’t going to have to spend,” Conway said.

Assemblyman Scott Wilk, R-Santa Clarita, said he, too, is worried about Medi-Cal enrollment growth.

“I’m troubled by the explosion of Medi-Cal enrollment growth that is robbing dollars from public education as was promised when voters approved Prop 30,” Wilk said in a statement.

“The best social program is a job, and we need to be addressing tort reform, workers comp reform and reducing regulations so entrepreneurs are willing to invest or re-invest in our state,” he said.

The spending plan also includes a 30-year proposal to start paying down California’s massive teacher pension liabilities that would split the costs between the state, school districts and teachers, with about $450 million going in in 2014-15. The state Legislative Analyst’s Office has estimated the liability is nearly $74 billion.

George Runner, a member of the state Board of Equalization, raised concerns with California’s business climate, though he was complimentary of portions of Brown’s proposed budget.

“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,” Runner said in a statement. But he added: “California continues to rank as the worst state to do business in an annual survey of business leaders.”

Assemblyman Steve Fox, D-Palmdale, said Brown’s announcement “indicates that the state is headed toward another balanced, on-time budget.”

“While negotiations between the Legislature and the governor’s office are ongoing, this year’s budget will continue to pay off California’s credit cards, increase the rainy day fund and begin to address the systemic funding issues in the teachers’ pension fund,” Fox said in a statement.

“I am heartened to see that the governor also increased funding to the courts by an additional $160 million, and continues to hold the line on fee increases with the University of California and CSU systems.”

Brown’s plan now goes to the Legislature, where many Democrats want to restore social services and take steps to combat poverty. Brown favors an approach that prioritizes savings and paying down the state’s debts and unfunded liabilities.

Lawmakers have until June 15 to make changes and pass a balanced budget for the fiscal year that begins July 1.



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