Governor Warned California Lawmakers: Refrain from Massive New Spending

(S) Governor Brown infactructure press conferece 2017 (12 of 1)-2
Governor Brown – Photographer: Steven Styles/Belator Media

Back in May 2016, Governor Jerry Brown urged lawmakers to refrain from any massive new spending programs, due to the possibility of an economic slowdown or recession.

“Right now, the surging tide of revenue is beginning to turn,” Governor Jerry Brown said,  at a press conference where he announced a revised $122.2 billion state budget and potential deficits ahead due to expiring tax increases.

Perhaps the governor’s admonitions for less spending were prophetic, given President Trump Administration’s executive order to cut off funding to sanctuary cities. State democrats have decried the idea and some media outlets report that lawmakers may be considering withholding state tax revenues from Washington DC if federal monies are withheld from The Golden State.

On top of the usual state expenses, the governor’s bond accountability web-page has posted an alarming need for $500 billion to be spent on California’s deteriorating infrastructure:

California faces over $500 billion in infrastructure needs to meet the demands of a population expected to increase by 23 percent over the next two decades.

(S) Gov Brown Flood Press 2-24-2017 (6 of 1)
Photographer: Steven Styles/ Belator Media

In November 2006, the voters approved the first installment of that 20-year vision to rebuild California by authorizing a series of general obligation bonds totaling $42.7 billion, however, the same bond accountability website also points out that “if California is to maintain its highly valued quality of life and continue its economic growth” that the consequences will be the governor proposing an additional $42.3 billion of bonds to fund infrastructure improvements over the next decade.

In spite of this apparently ‘immediate’ need for infrastructure spending–and Governor Brown’s May warnings for fiscal conservancy–several 2017 legislative bills, from both Assembly & Senate appear to call for even more spending while simultaneously thumbing their nose at the federal government. SB562, for example, which would revamp the state’s health care, would add billions to the state’s budget annually by more than doubling the current Medi-Cal caseload, even more if Trump withhold federal funds, which pay a little over half of MediCal’s current annual cost.

(S) President Trump Reno NV 11 2016 (11 of 1)
Photographer: Steven Styles/ Belator Media

Another costly plan, unveiled earlier this month by state Democrats, is to make tuition & living costs free for state college students.

“California is taking the boldest step in the nation for making college debt-free,” Assembly Speaker Anthony Rendon, D-Paramount, said in a recent press conference.

The cost for the ‘free college’ program would come at a price tag of $1.6 billion per year, phased in over five years and would be paid for using money from the state’s General Fund, lawmakers say. Proponents say existing tax revenues will cover the cost, but other projections to provide universal college came in at a much higher cost of $3.3 billion annually.

Question: Can California afford to pick a fight with Uncle Sam?

California receives more federal money than any other state.  According to the California Budget & Policy Center, more than 1/3 of California’s annual budget is made up of Federal Funds:

The current state budget includes nearly $96 billion in federal funds for 2016-17, the fiscal year that began last July 1. This is more than one-third (36 percent) of the total state budget, which also includes more than $170 billion in state funds for the current fiscal year. – Fact Sheet, December 2016 · By Scott Graves

Just under one third of federal funds allocated to California, or $102 billion, go to retirement benefits, including Social Security payments and veterans benefits. Less than one third, or $99 billion, was spent on non-retirement benefits, like Medicare, food assistance, and unemployment insurance.

2nd Question: if federal funds are indeed withheld from California, then who will cover the shortfall for our current spending, let alone all the new spending pending in the legislature?

Article by L. R. Styles. Photographer: Steven Styles/ Belator Media

California’s Progressive High Cost of Living

Capital Music Man color
Photographer: Steven Styles/ Belator Media

California is widely-considered to be a “deep blue” state, a veritable bastion of liberal and progressive thinking, with corresponding legislation and the federal funding to back it up.

Despite a plethora of publicly-funded programs–California is one of the most expensive states to live in … especially for those in the lowest income-brackets.

According to 2015 US Census data, 15% of Californians live below the poverty line… but, according to the California Poverty Measure (CPM), that number is closer to 21%.

Even more disconcerting: according to a 2015 study by the United Way SCA, the US Census figures don’t even begin to cover the daily cost of living here in California; the aforementioned study estimates that 1/3 of California households cannot cover basic monthly costs.

One in three California households (31%) do not have sufficient income to meet their basic costs of living. This is nearly three times the number officially considered poor according to the Federal Poverty Level. Source: United Way SCA 2015 Study

The high cost of living in California is most notably reflected in the amount of money folks spend on food per month:

7-15-2016 N. Natomas Certified Farmer's Market (36 of 48)
Photographer: Steven Styles/ Belator Media

a typical household of 2 adults & 2 children spend $879 a month on average, according to MIT’s Living Wage Calculator for California ; the same calculator puts the necessary annual income (before taxes) for the same family at $57,986. According to the Department of Numbers, an ACS survey shows the median per capita income for California was $31,587 in 2015.

Not surprisingly, California receives the highest dollar amount of federal funds of any US state; in FFY 2012-13 (the most recent publicly-available stats I could find) the state received $343 billion from the US government.

A little over 2.2 million households utilize 2 housing assistance programs to pay their monthly rent and approximately 4.2 million Californians receive supplemental nutrition benefits (Food Stamps). Putting that in perspective locally, according to an article by the Sac Bee The Sacramento Housing and Redevelopment Agency currently receives money enough to offer housing vouchers to over 12,000 households. According to a fact-sheet by CPPB.org 115,738 Californians were homeless in 2014.

Money generation, however, doesn’t appear to be an issue in The Golden State.

California is widely-regarded as the 6th largest economy in the world, with a mind-blowing $2.44 trillion dollars GDP annually, according to The Bureau of Economic Analysis’s report on state growth. And yet as of December 2016 EDD reports that only 18,165,400 California residents are currently employed, in a state of just under 40 million people.

Given the trillions of dollars being generated by the state’s economy, it is no small question to ask how California’s monies–both state & federal–are being spent.

gov budget 2017-2018 chart 3

Included in Governor Brown’s 2017 Budget was the above pie chart. According to the chart, Education–both elementary & higher–gets 54.5% of all state spending. With that kind of money, the average taxpayer would expect California to be on the Top Ten List regarding student performance…. but, no:

test scores California 2016

According to the above image, from a 2016 poll of test scores, and from Wallet Hub’s 2016 findings, California’s in the bottom 10 worst school systems in the nation.

Noble intentions aside, for many taxpayers California’s high cost of living has yet to justify its expense.

Article by L. R. Styles. Photographer: Steven Styles/ Belator Media