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Brown's California Budget: Slim, Smart, and Pragmatic

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The budget California's governor unveiled last week was vintage Jerry Brown.   It was slim and smart, pragmatic and consequentially incomplete.

The state continues to recover from the recession, and its tax revenues are up.  Brown's budget sent a large hunk of the new revenues to elementary and secondary education, in part to repay shortfalls in constitutionally required payments not made during the state's economic collapse.

$4-billion here, $7-billion there; pretty soon you're talking about real money.  John Fensterwald does his best to explain it all, but exactly who's getting what is still far from clear.  Brown's headline was that schools have received a 39% increase over four years. (See official budget message.)

But the key to Brown's budget is the governor's rock solid fiscal constraint. "Now we have a carefully balanced budget, more precarious than I'd like, but it's balanced," Brown told reporters. "We can keep it that way, but it will require self-discipline and real prudence...."

If-we-cant-get-people-in.jpgThus, the budget was notable for what it didn't do.  It didn't lay a glove on the state's dysfunctional taxing system that despite recent increases places California in bottom tier rankings of cost-adjusted state funds for education.   As veteran Los Angeles Times columnist George Skelton noted:

"Preferably, he would have taken an ambitious step toward tax reform, broadening the revenue base to make it less volatile—less vulnerable to the inevitable up-and-down cycle of the economy.  The revenue stream needs to be stabilized, principally by extending the sales tax to services while lowering the rate.

Brown did give a welcoming nod to new state Sen. Robert M. Hertzberg's plan to sponsor legislation expanding the sales tax to services, which account for 80% of California's economy.

'Look, I think Mr. Hertzberg's going to come up with some great ideas,' the governor told inquiring reporters Friday after unveiling his proposed $165-billion state budget for the next fiscal year. 'And I think people ought to listen to them and see where they go.'

'But I'll tell you this: Taxing new people is always difficult.  So if you tell people their Pilates class now takes an 8.5% sales tax, they may not be as yoga-happy as they were before.'"

Put bluntly, Brown is not going to spend his political capital on ideas that have little chance of passage.  As Skelton put it, "In the state Capitol, the political professor is Jerry Brown."

Not everyone is happy.  The University of California has not shared in the fruits of new revenues to the extent that public schools have, and the governor has had tense relationships with UC president Janet Napolitano and the Board of Regents, who are threatening fee increases if Sacramento does not cough up more money.

And the California Budget Project protested that the boat in which the state's poor are riding got very little lift from the tide of new revenue:

"Yet, even with increased revenues and a continuing economic recovery that has yet to reach many Californians, the Governor prioritizes fiscal austerity over investing in broadly shared prosperity.  While the Governor's proposed budget includes long- term plans for paying down budgetary debt and saving for a rainy day, it lacks a similar vision for reinvesting in people and communities and ensuring that all Californians share in the state's economic gains."

Brown's right to keep the lid on spending.  The state's Democrats are used to voting their hearts, and the Republicans will paper over a deficit rather than raise taxes.  Given this unfortunate meeting of the minds, California dug a deep hole for itself, one which only Brown's determination and promises to the taxpayers of restraint have been able to turn around. 

But he's wrong not to address the structural problems, at least at the level of ideas.  If we can't get people in Sacramento talking about how taxing and revenue might be different, then they never will be.

 

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