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Calif. Gov. Jerry Brown Gives Budget Proposal: 'Decade of Deficits Behind Us'

An improving economy will allow the State of California to pay down debt and put some money into reserve accounts, which would be used in years when volatile capital gains tax revenues come up short, the governor said.

Gov. Jerry Brown (Photo by Justin Sullivan/Getty Images)
Gov. Jerry Brown (Photo by Justin Sullivan/Getty Images)

Gov. Jerry Brown said Thursday in San Diego that California's finances are healthy, but long-term liabilities require a prudent state budget in the upcoming fiscal year.

Brown spoke at a news conference on the day he released his $155 billion proposed budget for 2014-15. He introduced his spending plan in Sacramento and was also going to speak in Los Angeles.

An improving economy will allow the state to pay down debt and put some money into reserve accounts, which would be used in years when volatile capital gains tax revenues come up short, the governor said.

"Some people would say let's go on a spending binge, but I say it's time for wisdom and prudence," Brown said. "Pay down our debt, put it in a rainy day fund, and be prepared for the next downturn."

California has about $355 billion in long-term liabilities, including $217.8 billion in unfunded pension costs to retired state employees and $64.6 billion in deferred maintenance, according to data provided by the governor's office.

Brown is proposing to increase spending on K-12 schools and community colleges, and provides more money to the University of California and California State University systems -- as long as they don't increase student tuition and fees. Colleges will need to come up with more creative budgets that don't depend on rising fees or out-of-state tuition, he said.

The governor also wants the state to pay down its $11 billion debt to school districts and local governments, which have seen funding cuts and payment deferrals in recent years -- causing the agencies to make tough budget choices.

The state would begin issuing refunds to schools in the next fiscal year, and cities and counties the year after, state Department of Finance Director Michael Cohen said.

In all, the state owes around $25 billion in deferred payments and loans that the governor calls "a wall of debt."

Spending in the general fund, which pays for basic state services, would increase 8 percent over this year to $106.8 billion, with most of the hike going to schools, under the proposal.

California is coming out of several rough budget years as the recession and weak recovery buffeted the state's revenue from capital gains taxes.

Capital gains became a large part of the state's income in the 1990s as Californians became wealthier, but annual revenue from the taxes has swung wildly in recent years -- while obligations remained constant, the governor said.

—City News Service

Alek J Hidell January 09, 2014 at 11:07 PM
this "wall of debt" is the unfunded liabilities of the teachers, fire and police, and all city county and state employees unions which have a stranglehold on California's future; we taxpayers are in a mortal battle over who controls our destiny...
Steve Newman January 10, 2014 at 07:16 PM
But don't forget the 65 million to train more people at the DMV to give illegals drivers license. Well he is creating jobs.
Alek J Hidell January 10, 2014 at 07:26 PM
the answer is to allow if not encourage insolvency in California. All the pensions in Detroit are either going to renegotiated for a fraction of their current amount or reneged upon in total. What happens there can happen here, even retroactively.
Aaron Powers January 10, 2014 at 07:55 PM
Alek, unfortunately, states cannot declare bankruptcy (otherwise, Cali would have gone broke years ago). Cities and Counties, yes. Bottom line, the public employee unions have and will continue to have a field day with our tax dollars. There's no stopping them now. Voters don't care, and they'll just continue to tax successful people and businesses until they're chased out of the state. The good news is, we have nice weather here, plus the tech industry - provided they stick around, until they're taxed to death too.
Aaron Powers January 10, 2014 at 08:34 PM
Alek, perhaps you misread my post. The state cannot declare bankruptcy, legally, thus the union contracts cannot be renegotiated under BK law. Reading your posts, it seems we may be on the same team here. Yes, the state was insolvent 4 years ago with the IOUs, but cannot declare bankruptcy - even though the definition of bankruptcy is in fact insolvency. It sucks, I know.
Alek J Hidell January 11, 2014 at 05:13 AM
IOU's would be fine since it would only be a few months before all banks would refuse them. As long as we pay their pensions and medical with bogus non-tender script as well, I'm fine with IOU's. payable win pigs fly. Once they walk off their jobs we can re-hire at a quarter the salary and pay with REAL money. Most important thing is to smash these parasite unions and cancel their bloated pensions which suck every dollar and make it impossible now for our kids to attend college. We also can't build any prisons.
Justice For All January 11, 2014 at 07:50 AM
Dream on gents! You all run around like Chicken Little, pissing your pants and thinking the world is going to end just because public employees are collecting the money that has been promised to them and rightly deserved. Well, the financial pendulum swings both ways. And, according to Gov. Moon Beam brown, California is apparently in the midst of turning around from fiscal disaster. He's even putting money away for a rainy day! The Dems have fixed everything. So why worry? By 2016, I'm sure we'll consider this episode a distant memory. The next thing you'll fret about is who to elect to fill the shoes of barack hussein obama after all the 'progress' he has put our country through.
SA January 13, 2014 at 11:02 AM
First off Clown Brown is smoking crack with Mayor Rob Ford … The only way to get California out of the red is to get rid of Unions & High Speed Rail to nowhere and stop running businesses out of the State.

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