LOS ANGELES — California Gov. Jerry Brown signed a $125 billion budget Tuesday that includes an infusion for roads and Medi-Cal and increases spending.
“I commend Gov. Brown for signing the 2017-18 budget today with no vetoes,” said Holly Mitchell, who oversaw the writing of this year’s budget for the first time as chair of the Senate Budget Committee.
Brown, who had announced an agreement with legislative leaders earlier this month, said the on-time state budget maintains fiscal prudence in uncertain times.
“California is taking decisive action by enacting a balanced state budget,” Brown said. “This budget provides money to repair our roads and bridges, pay down debt, invest in schools, fund the earned income tax credit and provide Medi-Cal health care for millions of Californians.” Medi-Cal is California's Medicaid program.
The budget and trailer bills to enact it were nearly universally applauded by the majority Democrats, but panned by some Republicans.
“Members of the Legislature and staff worked long hours to write a spending plan that included new spending and improved protections for children, seniors, those in need and the environment, as well as an aggressive investment in the state’s rainy-day fund,” Mitchell said.
Brown said the budget “focuses state spending on the governor’s key priorities – investing in education, counteracting the effects of poverty, and improving the state’s streets, roads and transportation infrastructure.”
In addition to a $1.4 billion reserve in the Special Fund for Economic Uncertainties, the budget adds $1.8 billion to the Proposition 2 Budget Stabilization Account, bringing the balance to $8.5 billion in 2017-18 – or 66% of its constitutional target.
Much of the new spending added after the May budget revision is one-time in nature, which avoids ongoing commitments that would put pressure on the budget, Brown said.
The budget also implements the Road Repair and Accountability Act, which provides $54 billion in new funding over the next decade.
But Sen. John Moorlach, R-Costa Mesa, said while Brown has warned of impending deficits, he has not done enough to protect the state’s bottom line in a recession.
“If you take the CAFR’s and look at unrestricted net deficits, California is the largest in the nation,” Moorlach said. “If you do it per capita, the state jumps up to 44th place, not last.”
Moorlach initially supported a plan to borrow up to $6 billion to prepay pension obligations that passed the California Senate on Monday after clearing the Assembly on June 22, but ended up voting against it. Prior to the vote, he expressed concerns that it wasn’t being well-thought out enough and the state should get concession from California Public Employees’ Retirement System for pre-paying.
The bill requires the Department of Finance to establish a schedule of payments in 2017-18 to borrow up to $6 billion from the state’s Surplus Money Investment Funds and make a supplemental employer contribution to the Public Employees’ Retirement Fund. The plan is designed to help reduce the underfunding of CalPERS, but drew the ire of critics who said the plan resembles pension obligation loans that have hurt localities in the past.
“This budget is a unified expression of California values during a strange and scary time in our nation,” said Assemblymember Phil Ting, D-San Francisco, chair of the Assembly Budget Committee. “We are fighting poverty, standing up for immigrants, and rebuilding our infrastructure. These investments to expand our middle class are budgeted while the state responsibly amasses financial reserves unseen for generations.
In trailer bills, the Legislature also limited the financial autonomy of University of California President Janet Napolitano and set a massive overhaul of the Board of Equalization that would shift most of the agency's duties to a new Department of Tax and Fee Administration.