In today’s press conference–open to credential media only–Governor Brown unveiled a revised state budget for California, including less of an expected budget shortfall:
Under the May Revision, the $5.8 billion revenue shortfall forecast in January is now a $3.3 billion shortfall – based primarily on higher capital gains. Even so, the budget is considerably more constrained than in any year since 2012.
Aside from the expected cautious spending allocations, the budget included a surprising action regarding the UC Audit scandal. Governor Brown’s budget press release included this line:
In response to the State Auditor’s review of the University of California (UC) Office of the President, the May Revision sequesters $50 million in UC funding until such time that the Auditor’s recommendations and other UC commitments are implemented.
Reporters fired off rounds of questions including the governor’s decision to give a $6 billion supplemental payment to CalPERS with a loan from the Surplus Money Investment Fund a step that–according to the governor’s press release–will “save the state $11 billion over the next two decades while continuing to reduce unfunded liabilities and stabilize state contribution rates.”
The governor’s plan to reimburse the payment will come from “Proposition 2’s revenues dedicated to reducing debts and long-term liabilities.” (Proposition 2 established a state constitutional goal of having 10 percent of tax revenues in the ‘Rainy Day Fund’.)
The governor predicts that by the end of 2017-18, the state’s Rainy Day Fund will have a total balance of $8.5 billion, or 66% of the constitutional target).
The governor’s revised budget also includes $6 Million for Attorney General Xavier Beccera’s office to help ‘fight’ the Trump administration on immigration & sanctuary cities.
The federal government is contemplating actions – such as defunding health care for millions of Californians, eliminating the destructibility of state taxes and zeroing out funding for organizations like Planned Parenthood – that could send the state budget into turmoil. (Source: governor’s office press release on revised May 2017 budget)
In January’s budget, The Governor called for a one-year delay in providing rate increases to child care providers that were reflected in the 2016 Budget Act, but this May Revision proposes to restore and maintain the $500 million child care funding package from the 2016 Budget.