Sunday, December 21, 2014 • 04:38
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An improving budget situation in California


June 04, 2014
On May 13 Governor Brown released his revised budget proposals, based on revenues received during the first quarter of 2014. The release of the "May Revise" has become an eagerly awaited yearly ritual in the Capitol, one that seldom fails to generate controversy.

This year, California's financial picture is improving. Revenues are up approximately $2.4 billion, but unanticipated increases in Medi-Cal and other health costs related to the implementation of Obamacare will consume an additional $1.2 billion. The governor wants to increase education spending by about $300 million, with much of the increase going toward unfunded liabilities in the State Teachers Retirement fund.

A bi-partisan agreement has been reached to create a rainy day fund, subject to voter approval, with long-term plans to begin paying down the $340 billion in unfunded mandates we have largely been ignoring. Obviously, with this huge amount of debt looming on the horizon, an improving revenue picture does not mean the Legislature can return to its old spending habits.

Fortunately, the governor has also recognized the "temporary" taxes included in Prop. 30, passed by voters in 2012, are really temporary. This year's financial windfall, based on a shaky economic recovery and temporary taxes, simply will not last. It is never prudent to spend one-time money creating new programs that will ultimately put the state back into an even deeper financial hole. Hopefully, the Legislature has learned its lesson; we can't tax, spend, and borrow our way to financial solvency. That road leads to ruin.

Marie Waldron

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