Report bolsters governor’s call for budget caution

FR16-OVERALL-Map-v8_0With the June 15 deadline to finalize the 2016-17 state budget looming, Gov. Jerry Brown continues to push back at Democratic lawmakers’ call for him to revise his $123 billion spending plan to include new or expanded spending on social programs. Brown says that the state’s revenue roller-coaster makes such spending risky.

Now the fourth-term governor has new evidence for his case. A comprehensive new report by the Mercatus Center at George Mason University that looked at every state’s audited financial documents from 2014 ranks California 44th in its ability to meet short-term bills and longer term obligations. The report makes the case both for caution on expanding new state spending and for putting as much as possible in the rainy-day fund that voters approved in 2014.

In two categories, the Golden State is in the middle of the back.

On budget solvency — which Mercatus defines as “can a state cover its fiscal year spending with current revenues, or does it have a budget shortfall?” — California ranked 23rd.

On service-level solvency — “how much ‘fiscal slack’ does a state have to increase spending if citizens demand more services?” — California ranked 28th.

Long-term picture for California is grim

But in three categories, the Golden State was far worse than the national average, buttressing Brown’s call to beef up the state’s rainy-day fund.

On long-run solvency — “can a state meet its long-term spending commitments? Will there be enough money to cushion it from economic shocks or other long-term fiscal risks?” — California ranked 46th.

On cash solvency — “does a state have enough cash on hand to cover its short-term bills?” — California ranked 47th.

On trust fund solvency — “how much debt does a state have? How large are its unfunded pension and healthcare liabilities?” — California ranked 42nd.

A recent New York Times story about Gov. Brown depicted him as having put California on solid fiscal ground and guided the state’s economy into a “period of prosperity.” The Times account suggested Brown and the Golden State could be a model for national Democrats.

The Mercatus study indicates that this narrative is based on perception more than hard data. Recent U.S. “U-6” unemployment data, which covers not just people without a job but people who work fewer hours than they want, backs up Mercatus. As of August, only six states had more residents unable to find jobs or full-time employment than California.

3 comments

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  1. Dude
    Dude 6 June, 2016, 15:06

    “Long-term picture for California is grim”

    Of course it is. California is being run (into the ground) by “we need more illegal aliens to suck our economy dry liberals”. Their solution? Tax California citizens more.

    Reply this comment
  2. Mike
    Mike 6 June, 2016, 20:02

    Agree I carry a big Bowie knife. Any loudmouth approach me violently about my Trump sticker will have his penis and scrotum removed. I will feed them to my pet snake rather than mice.

    Reply this comment
  3. Spurwing Plover
    Spurwing Plover 7 June, 2016, 05:40

    It used to be California Here i Come now its California Away i Go(and im never coming back)The demac-RATS have ruined the state

    Reply this comment

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Chris Reed

Chris Reed

Chris Reed is a regular contributor to Cal Watchdog. Reed is an editorial writer for U-T San Diego. Before joining the U-T in July 2005, he was the opinion-page columns editor and wrote the featured weekly Unspin column for The Orange County Register. Reed was on the national board of the Association of Opinion Page Editors from 2003-2005. From 2000 to 2005, Reed made more than 100 appearances as a featured news analyst on Los Angeles-area National Public Radio affiliate KPCC-FM. From 1990 to 1998, Reed was an editor, metro columnist and film critic at the Inland Valley Daily Bulletin in Ontario. Reed has a political science degree from the University of Hawaii (Hilo campus), where he edited the student newspaper, the Vulcan News, his senior year. He is on Twitter: @chrisreed99.

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