Brown submits May Revise budget

Brown submits May Revise budget

Brown rainy day fund Wolverton, Cagle, April 21, 2014Yesterday, Gov. Jerry Brown submitted the May Revision of his 2014-15 budget proposal with a mixture of line-item revisions. Most  were budges that only moved the budget slightly. The fiscal year begins July 1. Over his January budget proposal, Brown increased the overall General Fund operating budget by $1 billion to $107.8 billion.

Budging the Budget 

One of the most minuscule budges of the governor’s touted “good news” budget was $450 million over three years to partly close the $70 billion underfunded portion of the California State Teachers’ Retirement System. That comes to $150 million per year, which reduces the liability by an infinistesimal 0.002 percent of the pension fund shortfall. However, this would increase to $5 billion per year mainly from higher contributions from teachers in future years. But such contributions first would require agreement by the powerful California Teachers Association and California Federation of Teachers unions. Brown announced another “good news” part of the budget is that Medi-Cal funding has been increased by $1.2 billion, or 4 percent of the $29.6 billion Medi-Cal line item. That increase would plug an expected 45 percent increase in recipients. The California Healthline news site reported:

“California officials had estimated that one million to two million additional residents would enroll in Medi-Cal through the end of 2014, but about 1.9 million consumers already had registered for the program by the end of March and an additional 900,000 applications are pending.

“The state is responsible for paying half the cost of new Medi-Cal beneficiaries who qualified for the program before the Affordable Care Act went into effect. California Department of Health Care Services spokesperson Anthony Cava said the state still is determining how many of the new Medi-Cal beneficiaries were previously eligible.”

The number of Medi-Cal recipients now comes to about 30 percent of all Californians. That confirms the U.S. Census Bureau’s study released last November that, when cost-of-living is taken in to account, California has the country’s highest poverty rate, at 23.8 percent of residents.

Rainy-day fund

Brown’s budget also includes his well advertised “rainy-day fund,” which would set aside  $1.8 billion for a contingency reserve. That comes to 1.67 percent of the General Fund budget. However, for the first 15 years of the rainy-day fund,  half of the annual revenues set aside will go to paying down what Brown calls the Wall of Debt. So that will water down the “rainy day” fund even more. In addition, any portion of capital gains taxes collected that exceed 8 percent of General Fund revenues would go towards the rainy-day fund. For fiscal year 2014-15, that would mean any capital gains revenues higher than $9.3 billion. So if Silicon Valley has a really great year and state capital gains revenues come to $10.3 billion, as projected, then an additional $1 billion would go into the rainy-day fund. But the question is whether the Legislature and the governor have the will to not spend the money. In 2004, Proposition 58 created the Budget Stabilization Account of 3 percent set asides per year from the General Fund and the Special Fund for Economic Uncertainties.  These two funds have been on the books for years but the willingness to save instead of spend hasn’t been there.

Drought relief

The governor proposes increasing by $142 million funding authorized under Senate Bill 103 for emergency drought programs. SB103 is the State Budget Act of 2013.  So the $142 million is a fudged carryover of money shifted from the 2013 budget. Back in February, Brown mostly just redefined $687.4 billion in pre-existing programs and federal fund transfers as a “drought aid package.” Of that, 81 percent came from prior water bond funding, 7 percent from FEMA programs, 5 percent from shifting state cap and trade air pollution taxes collected from large industries to drought relief projects, and 2 percent from prior Assembly Bills 21 and 118.

Trudging the Budget

Brown’s budget would reduce the $14.8 billion remaining of what he calls the Wall of Debt by 2017. However, that reduction does not address the entire $340 billion in debt , deferred payments, and other liabilities tallied by the Legislative Analyst.                    Figure INT-02: Budget Plan Would Eliminate the Wall of Debt

 2010-11 2013-14 2014-15 2017-18
Deferred payments to schools and community colleges $10.4 $6.1 $0.0 $0.0
Economic Recovery Bonds (stimulus) 7.1 3.9 0.0 0.0
Loans from Special Funds 5.1 3.9 2.9 0.0
Unpaid costs to local governments, schools and community colleges for state mandates 4.3 6.7 6.6 0.0
Underfunding of Proposition 98 3.0 2.4 1.8 0.0
Borrowing from local governments (Proposition 1A) 1.9 0.0 0.0 0.0
Deferred Medi-Cal Costs 1.2 1.8 2.2 0.0
Deferral of state payroll costs from June to July 0.8 0.8 0.8 0.0
Deferred payments to Cal-PERS 0.5 0.4 0.4 0.0
Borrowing from transportation funds (Proposition 42). 0.4 0.2 0.1 0.0
TOTAL $34.7 $26.2 $14.8 $0.0
Data Source: http://www.ebudget.ca.gov/FullBudgetSummary.pdf

19 comments

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  1. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 May, 2014, 15:33

    One of the most minuscule budges of the governor’s touted “good news” budget was $450 million over three years to partly close the $70 billion underfunded portion of the California State Teachers’ Retirement System.

    CalSTRS needs 5 BILLION!!! per year to become solvent, and he is giving $450 million, less than 10% of what is needed.

    Look, Detroit is in BK and will cut pensions, so will Stockton, and it is going to come to every City, Muni, quasi government agency there is in CA within the next 10 years. Maybe sooner if we have a recession.

    The Franklin Funds are challenging Stockton’s BK “plan of adjustment”, aka exit plan, and it is clear the judge is going to go after CalTURDS, he has already hinted at it by saying the CA Constitution “may not” (code for does not) protect pensions in a federal Court.

    Reply this comment
    • SeeSaw
      SeeSaw 15 May, 2014, 13:27

      Why don’t you grow up! Its, “CalPERS”! Federal law governing Chapter 9 bankruptcy proceedings already gives the bankrupt entities the authority to set up their own exit plans, with the approval of the judge. The judge has the power to approve or not approve the plan–the ball is in his court–nothing is, “clear”.

      Reply this comment
  2. Donkey
    Donkey 15 May, 2014, 07:13

    The RAGWUS is Fantasyland of the fools!! 🙂

    Reply this comment
  3. BillyBS
    BillyBS 15 May, 2014, 14:49

    Let’s aim for a 30 percent poverty rate and 40 percent on Med-Cal. Go golden state.
    The governor also stated that we hav to live within our means(bravo) until the next tax increase(i.e justify it by “balancing” the books). Get ready folks, this one isn t going after the wealthy, It isn t going after the 23.8 percenters. The next tax increase will go right at the middle class to fix the pensions, pay for college(major in Sloth and Entitlement) for growing indigent class, pay for the high speed rail to transport the growing prison pension population(five years incarcerated earn a state pension same as corrections employees).

    Reply this comment
  4. Leotis Ahmad Jones
    Leotis Ahmad Jones 15 May, 2014, 19:41

    See Sow, Squeal like a pig. Oink. Make you moan like you dreams, Sow.

    Reply this comment
  5. SeeSaw
    SeeSaw 15 May, 2014, 20:37

    Childish bullies–you make your loved ones proud!

    Reply this comment
  6. Bud Led
    Bud Led 15 May, 2014, 21:51

    Honestly Poodle— Grow up– these personal comments are childish

    Reply this comment
  7. Leotis Ahmad Jones
    Leotis Ahmad Jones 18 May, 2014, 19:54

    Sow, Where are u?
    Very Truly Yours Forever,
    LA Jones

    Reply this comment

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budgetbudget deficitJerry BrownWayne Lusvardi

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