"California’s booming surplus creates rewards, responsibilities
San Francisco Chronicle November 19, 2015
Sacramento, California, May 14, 2015. Brown's budget revise includes increased funding for schools, the rainy day fund, and creates a new state earned income credit.
Once a financial basket case, California now has a budget overflowing with tax money brought on by a surging economy and temporary taxes. This astonishing wealth should make Sacramento cautious about new spending but also mindful of the state’s frayed social safety net.
The towering numbers erase the wobbly finances that produced a $26 billion shortfall, a string of papered-over deficits, and comparisons to debt-plagued Greece. Gov. Jerry Brown and state legislators cut the budget and persuaded voters to approve short-term boosts in sales and upper income taxes plus a rainy-day fund.
Those fixes are now paying off, bringing up a once-unimaginable question: what to do with billions in surplus money in future years. Even with a downturn, the state could carry on, according to the independent Legislative Analyst’s Office, which detailed the financial predictions. “The state is better prepared for an economic downturn than it has been at any point in decades,†the report said.
One feature of the budget picture is the rainy-day fund, established by voters last year to sock money away in good times. Though the fund skims off much of the predicted surpluses for serious emergencies, there will still be billions left up for grabs or further savings.
There are plenty of sore spots in a state afflicted with a drought, climate change challenges and deep economic divisions. Just this week, directors of an overcommitted state pension pool voted to trim expected investment income, an urban study group listed 77 cities with high jobless and poverty rates, and lawmakers confronted a $1.1 billion bill to maintain Medi-Cal coverage for millions of poor residents.
Brown’s team played down the rosy forecast, no doubt to cap spending ideas as it works on next year’s budget. Brown’s finance director, Michael Cohen, noted the “sobering reminder†of always-possible downturn and emphasized safeguarding the rainy-day fund “during these fleeting good times.â€
But not so restrained are lawmakers and interest groups with social service wish lists. Outgoing Assembly Speaker Toni Atkins, a San Diego Democrat, wants more money for poor, elderly and disabled residents. Other groups may push to extend the temporary taxes created by Proposition 30 in 2012. Republicans, still a factor on budget matters, say the building surpluses show there’s no need for extra taxes.
Extra money, just like too little of it, is provoking political trouble. Brown and the Legislature should work together to find a balance point between these viewpoints. California has come a long way from the budget disaster, but its leaders must heed the damage done in a state divided by economic inequality.
Good times rolling
This year
By the close of the fiscal year next June, California will have $7.9 billion in reserves, $3.3 billion more than expected.
Next year
In June 2017, the state could have $11.5 billion in reserves."
If California can change... SO CAN WE.
San Francisco Chronicle November 19, 2015
Sacramento, California, May 14, 2015. Brown's budget revise includes increased funding for schools, the rainy day fund, and creates a new state earned income credit.
Once a financial basket case, California now has a budget overflowing with tax money brought on by a surging economy and temporary taxes. This astonishing wealth should make Sacramento cautious about new spending but also mindful of the state’s frayed social safety net.
The towering numbers erase the wobbly finances that produced a $26 billion shortfall, a string of papered-over deficits, and comparisons to debt-plagued Greece. Gov. Jerry Brown and state legislators cut the budget and persuaded voters to approve short-term boosts in sales and upper income taxes plus a rainy-day fund.
Those fixes are now paying off, bringing up a once-unimaginable question: what to do with billions in surplus money in future years. Even with a downturn, the state could carry on, according to the independent Legislative Analyst’s Office, which detailed the financial predictions. “The state is better prepared for an economic downturn than it has been at any point in decades,†the report said.
One feature of the budget picture is the rainy-day fund, established by voters last year to sock money away in good times. Though the fund skims off much of the predicted surpluses for serious emergencies, there will still be billions left up for grabs or further savings.
There are plenty of sore spots in a state afflicted with a drought, climate change challenges and deep economic divisions. Just this week, directors of an overcommitted state pension pool voted to trim expected investment income, an urban study group listed 77 cities with high jobless and poverty rates, and lawmakers confronted a $1.1 billion bill to maintain Medi-Cal coverage for millions of poor residents.
Brown’s team played down the rosy forecast, no doubt to cap spending ideas as it works on next year’s budget. Brown’s finance director, Michael Cohen, noted the “sobering reminder†of always-possible downturn and emphasized safeguarding the rainy-day fund “during these fleeting good times.â€
But not so restrained are lawmakers and interest groups with social service wish lists. Outgoing Assembly Speaker Toni Atkins, a San Diego Democrat, wants more money for poor, elderly and disabled residents. Other groups may push to extend the temporary taxes created by Proposition 30 in 2012. Republicans, still a factor on budget matters, say the building surpluses show there’s no need for extra taxes.
Extra money, just like too little of it, is provoking political trouble. Brown and the Legislature should work together to find a balance point between these viewpoints. California has come a long way from the budget disaster, but its leaders must heed the damage done in a state divided by economic inequality.
Good times rolling
This year
By the close of the fiscal year next June, California will have $7.9 billion in reserves, $3.3 billion more than expected.
Next year
In June 2017, the state could have $11.5 billion in reserves."
If California can change... SO CAN WE.
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