Gov. Brown: No new spending

JerryBrown-2016-17budget010716Gov. Jerry Brown on Friday repeatedly warned against new spending programs as he introduced his revised budget, heeding advice from Moody’s and others to bunker down and prepare for an eventual economic downturn.

While the state’s finances have substantially improved from the last economic downturn, Brown has often said the state’s over-reliance on capital gains tax revenue will force dramatic cuts when the economy goes south if the state is not prepared.

Since earlier this year when the initial budget was unveiled, tax revenue projections were reduced $1.9 billion to reflect April’s personal income tax receipts missing expectations by $1 billion plus “sluggish” sales tax revenue.

“Things don’t last forever and right now the surging tide of revenue is beginning to turn, as it always does,” Brown said on Friday. “That’s why it’s very important and best that we prepare for our time of necessity.”

Rainy-day fund

Just last month, Moody’s rated California as the least prepared to withstand a recession of the largest states, for the over-reliance on income tax revenue, a lack of flexibility due to Constitutional mandates and entitlement spending and and weak reserve funding.

In 2014, voters passed Prop. 2, a rainy-day fund. The revised budget showed contributions to the fund had been reduced $1.6 billion since January. Brown on Friday continued to call for a robust reserve fund at the expense of new programs.

“We’re going to have a very productive, substantive debate over the next month,” Brown said of the budget negotiations. “But at the end of the day, we’ve got to come out with a sizable reserve. We can’t have any significant new spending and we’ve got to get ready for the downturn.”

Prop. 30

Voters appear likely to decide in November whether to extend Prop. 30 for 12 years — a “temporary” tax on the top incomes that was originally used to bolster education funding. The revised budget notes that letting this lapse would create the better part of a $4 billion budget shortfall by 2019, requiring cuts.

“Until the voters decide this important question, no significant new ongoing spending commitments should be made,” according to the budget summary.

Brown would not take a public position on the Prop. 30 extension, saying he was “leaving it to the people of California.”

17 comments

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  1. Richard Rider
    Richard Rider 13 May, 2016, 23:16

    ***
    “Until the voters decide this important question [making Prop 30 income tax rates permanent], no significant new ongoing spending commitments should be made,” according to the budget summary.
    ***

    This is the key to understanding Prop 30 (soak the rich income tax rates 34% higher than the 2nd highest state). It’s not about “money for the kids,” or other current programs. It’s about funding for NEW programs — expanding welfare and corporate subsidies.

    Reply this comment
    • Standing Fast
      Standing Fast 14 May, 2016, 12:35

      Thanks for the heads-up. I do sometimes find myself thinking new taxes are for existing essential services. Even with all my years as a local government watchdog and fan of “Yes Minister”.

      Reply this comment
  2. JPR11
    JPR11 14 May, 2016, 09:54

    Seems like we are in the midst of a Tax Frenzy. How much more of this will people take? Prop 30 is only about paying down unfunded retirement benefits, not the usual school funding justification. Sac should take a time out and tell the taxpayers what we get for the massive spending increase. Enough is enough

    Reply this comment
  3. Spurwing Plover
    Spurwing Plover 14 May, 2016, 09:57

    No new spending says Moonbeam Blabber,Blabber,Blabber all mouth and no mind Moonbeam Brown

    Reply this comment
  4. JPR11
    JPR11 14 May, 2016, 10:00

    Any idea on how much state spending has increased in the last 5 years or where you can get the info?

    Reply this comment
    • Standing Fast
      Standing Fast 14 May, 2016, 12:52

      State Controller’s Office website, which I think is http://www.sco.ca.gov
      or you can Google.

      And, believe it or not, I just happen to have the exact amount of expenditures in a tidy rounded-off number from the State’s Budgetary/Legal Basis Annual Report for all operations including General Fund, Special Funds, General Obligation Bonds, and Non-Governmental excepting activity funded by federal grants for fiscal year ending June 30, 2011:
      $298,300,000,000

      That turned out to be an Average Per Capita Cost of $8,286.11.

      That same year, the Average Per Capita Cost of the Federal Government was $19,760.29.

      If you want to have even more fun, find the amount of total expenses of your county for Primary Government Operations, including General Fund, Special Services, Flood Control, Transportation, Economic Development (by whatever name), Sheriff, etc., and the total expenses of your city or community services district. Divide the total by the population of the jurisdiction.

      Then, add the Average Per Capita Cost of City, County, State and Federal Government. This number will apply only to people in your city or community services district.

      Then, find the Average Per Capita Income and Unemployment Rate for your city or community services district.

      I guarantee you will be wanting to sit down when you see what happens. I don’t know where you have to live to see income exceed the cost of government. It certainly isn’t where I live.

      All California cities and counties have to send an annual report on their financial situation to the State Controller’s Office. You can check that out or go to the Finance Department of your city or county and ask for their annual in-house financial report.

      Bon appetite!

      Reply this comment
      • Standing Fast
        Standing Fast 14 May, 2016, 12:57

        I forgot to mention that so few people know about the Budgetary/Legal Basis Annual Report that being able to cite this source will move you up into the big leagues of Watchdog Heaven.

        Be sure to make a reference to it when you publish the results of your analysis.

        Reply this comment
  5. bob
    bob 14 May, 2016, 13:06

    Brown would not take a public position on the Prop. 30 extension, saying he was “leaving it to the people of California.”

    Oh come on! Brownie is a Demorat. He loves tax increases and he’s scaring people about “cuts” if the tax increase is not extended (really, made permanent).

    This from an AP article

    “It seemed to be an implicit endorsement” of the tax extension, said Jon Coupal, president of the Howard Jarvis Taxpayers Association, which opposes continuing the Proposition 30 increases passed in 2012.

    Brown’s “wink and nod” was ironic in the face of his complaints about the volatility in California’s revenue due to reliance on wealthy taxpayers, Coupal said.

    Left-leaning interest groups quickly pounced on Brown’s warning to make their case for maintaining the higher taxes.

    And one thing you are NOT reporting is what happens AFTER the November election.

    The Demonrats want to add another 12 cents to the gas tax and raise car registration fees on average $36 per car. They want to add another $6 billion dollars in annual taxes on fuels and vehicles.

    Why isn’t anyone talking about this? These Demonrats aren’t mentioned any of this in this election year but everyone else should be making this a major issue.

    Reply this comment
  6. bob
    bob 14 May, 2016, 13:08

    Just wait until AFTER the election.

    The Demonrats are going to go after even more tax increases including big hits to fuel and vehicle taxes.

    Reply this comment
  7. ricky65
    ricky65 14 May, 2016, 14:58

    Here’s a link to State Dept of Finance which has the best info on historical state budget facts:
    http://www.dof.ca.gov/budgeting/budget…/CHART-B.pdf
    Moonie’s and his Corrupt-o-crat cronies only refer to the state general fund budget figures without referring to the special funds and other spending which has been increasing way beyond the rate of inflation. They have also transferred a lot their spending to other categories like special funds to hide the the rate of budget increases year to year from the public eye.
    If you look at the total of all expenditures column on the far right, which includes special funds, bonds, and federal funds you can get the real picture of how out of control the state government spending really is.

    Reply this comment
    • Standing Fast
      Standing Fast 14 May, 2016, 15:19

      This is correct.
      What the Legislature & media & watchdog groups focus on is the State’s General Fund.
      I’m not sure if they know about the rest of the budget.

      Reply this comment
  8. Queeg
    Queeg 14 May, 2016, 15:50

    Comrades

    Not lookin good…..not good….

    Reply this comment
  9. ricky65
    ricky65 14 May, 2016, 17:51

    That’s nice…a link that doesn’t work.
    Here try this:
    http://www.dof.ca.gov/budgeting/budget_faqs/information/
    Then scroll to Chart B to get the info.

    Reply this comment
  10. Truthafuss
    Truthafuss 15 May, 2016, 02:04

    Brown grows a brain at his eleventh hour? Don’t think so.

    Reply this comment
  11. Truthafuss
    Truthafuss 15 May, 2016, 02:06

    Yes. And, alternatively, can we trust Sacromania in any way at all? Anyone? Anyone?

    Reply this comment
  12. Bubba
    Bubba 15 May, 2016, 06:54

    Oh don’t forget the idea of taxing people on the miles they drive and a tax.on services

    Reply this comment
  13. Queeg
    Queeg 15 May, 2016, 15:57

    Comrade Bubbie

    Try a North Carolina exit like dear DESI.

    He was quirky miserable and penned some the most vile/edgy/kinky stuff ever on CWD.

    Reply this comment

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