Budget Maneuvering Begins Between Brown and Democrats

Republicans complimented the restraint exercised by Democratic Gov. Jerry Brown in the revised budget he presented May 14.

Several of Brown’s Democratic legislative allies criticized him for being too tight-fisted.

Ultimately, scattered GOP applause isn’t going to translate into budget “aye” votes and Democratic disgruntlement isn’t going to mean less than the 41 votes needed to send a budget back to Brown that looks quite similar to the one that spawned their initial complaints.

What the rhetorical volley does mean is the official start of budget season.

There have been several months of subcommittee hearings and explications of the spending blueprint Brown unveiled in January but it’s after the May Revision when things get real, including the budget itself – at least in large measure.

Numbers can be crunched in any number of ways as Brown proves this year  but, unlike its January predecessor, the governor’s May 14 budget is a product of actual revenues collected from December through April – instead of estimates – and five months of state and national economic activity that was only predicted in January.

A more reliable reckoning of revenue and spending obligations is the first step in budget negotiations. Without knowing how much money is available, it’s impossible to know how much to ask for in return for a vote.

Brown, who has been involved in budget back-and-forths longer than a number of current legislators have been alive, knows the drill.

Prudence and restraint is required because the economy isn’t doing as well as in January, Brown says. Federal sequestration and a bump-up in the payroll tax are throttling California economic growth.

The $4.5 billion in unexpected cash collected since January isn’t really that much and what revenue there is, the constitution mandates it must be sent to schools.

A nice two-fer for Brown who wins media atta-boys for holding the line on spending and headlines like “Budget Includes Major Infusion for Education” in the San Francisco Chronicle.

Sorry gang, says Brown, crocodile tears streaming, my hands are tied. There simply isn’t money to be spent on other priorities, even those of Senate President Pro Tempore Darrell Steinberg of Sacramento, the state’s second most powerful Democrat.

Brown’s cupboard-is-bare rap is simply playing hard-to-get with lawmakers, as Steinberg and his more savvy colleagues readily recognize.

The Legislative Analyst calls Brown on it.

While the analyst doesn’t use the word “lowball” in their assessment of the Democratic governor’s latest spending proposal but that’s sure what they suggest Brown is doing:

“We do not agree with the administration’s view that there has been a significant dimming of the state’s near–term economic prospects,” the analyst writes in its May 17 Overview of the May Revision.

“The administration’s new revenue forecast does not seem to reflect some recent economic improvements—most notably, a sharp increase in stock prices. As a result, our forecast now is $3.2 billion higher than the administration’s May Revision total” for this fiscal year and those preceding and following it.

Brown replies through Department of Finance Spokesman H.D. Palmer that “roughly 80 percent of the difference” between the two revenue forecasts is the “respective projections for capital gains – which is the most volatile revenue source and is subject to dramatic swings.”

A point the analyst also makes in their report.

Elsewhere it is 40-page examination of Brown’s latest budget, the analyst urges lawmakers to be “cautious” but then says that if the analyst’s revenue estimates are right “the Legislature would have much more flexibility to prioritize state spending within the next year or two.”

Translated: There’s more money to spend on programs of importance to Democratic lawmakers.

Fiscal priorities of Republicans are not important. Proposition 25, approved in November 2010, says the budget and related legislation can be passed on a majority vote. No Republican votes are needed.

That might explain some of the standing-in-solidarity with Brown on keeping a tightish rein on spending and support for education:  There’s nothing to gain from the budget except a forum to promote Republican ideology.

“We have common ground with the governor in a belief that we cannot return to a culture of overspending that drives new budget crises,” said Senate GOP Leader Bob Huff of Diamond Bar in a statement.  “Gov. Brown referred to this as a ‘Call for Prudence,’ we would call it ‘Common Sense.’

“It seems that the governor’s biggest budget challenge will be in restraining legislative Democrats and their growing wish list of new spending.”

Hard to disagree with Huff given this release by Sen. Noreen Evans:

“Now is the time to exercise some fiscal responsibility by reinvesting in California’s economy following years of austerity measures. The cuts-only approach … is now contributing to our high unemployment rate and is

hampering a full economic recovery,” the Santa Rosa Democrat said. 

“Funding cuts to state programs caused historical job losses in every sector.  These same funding cuts reduced the money being spent in our local economies.  California needs to spend some of our new revenues to put people back to work and contribute to the overall economic activity in the state to induce a resurgence in our local economies.”

While saying it was “refreshing” not to be again cutting deeply into state programs, Steinberg allowed as to there being  a “disappointing aspect” to Brown’s plan.

“It’s important that we also begin making up for some of the damage done to tens of thousands of Californians,” Steinberg said in his statement. “The governor proposes few if any resources to restore cuts made over the past few years to the courts and to health and human services.”

Then Steinberg notes the “serious concern” Senate Democrats have with the centerpiece of Brown’s budget plan – a new funding formula for schools that sends more state dollars to districts with higher numbers of special needs and English-learner students.

Perhaps some of that “serious concern” might be assuaged by Brown “making up for some of the damage done” through past budget cuts? 

Rather gratuitously, Steinberg also says in his statement “the budget debate begins in earnest.”

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