State bud­get plan goes to a vote

Law­mak­ers are set to ap­prove a pro­posal that calls for higher spend­ing than Gov. Brown sup­ports.

Los Angeles Times - - FRONT PAGE - By Chris Mege­rian

SACRA­MENTO — The Leg­is­la­ture is ex­pected to ap­prove a bud­get Mon­day that bets on Cal­i­for­nia’s econ­omy to con­tinue grow­ing and sets the stage for higher state spend­ing in com­ing years.

The plan, which is not sup­ported by Gov. Jerry Brown, in­cludes $749 mil­lion more in dis­cre­tionary spend­ing than the gover­nor has pro­posed. And be­cause some of the in­creases would be phased in over time, those ad­di­tional costs in fu­ture years would be $1.2 bil­lion or more.

For ex­am­ple, a boost in pay­ments to dis­abled res­i­dents would start half­way through the fis­cal year and cost $66 mil­lion in the next bud­get. The full cost of the pro­posal, how­ever, would be $132 mil­lion an­nu­ally.

“You’re putting the camel’s nose into the tent here,” said Mike Gen­est, who served as Gov. Arnold Sch­warzeneg­ger’s fi­nance direc­tor. “And we know the rest of the camel is com­ing in.”

The rul­ing Democrats said their bud­get makes cru­cial in­vest­ments in gov­ern­ment pro­grams for needy Cal­i­for­ni­ans, and they re­ject con­cerns from Repub­li­cans and the gover­nor that their pro­posed spend­ing would

reach un­sus­tain­able lev­els.

“You have re­serves in the case that you’ve mis­cal­cu­lated,” said As­sem­bly Speaker Toni Atkins (D-San Diego).

Un­der state law, leg­is­la­tors have un­til mid­night to ap­prove a spend­ing plan — or their pay stops. A new bud­get is re­quired to take ef­fect July 1, and ne­go­ti­a­tions be­tween Brown and law­mak­ers have been on­go­ing.

Demo­cratic law­mak­ers built their bud­get plan on rev­enue es­ti­mates from non­par­ti­san leg­isla­tive an­a­lysts that are higher than pro­jec­tions from the Brown ad­min­is­tra­tion. Although the gover­nor has al­lowed some ad­di­tional spend­ing in pre­vi­ous years, he has al­ways in­sisted on us­ing his lower rev­enue tar­gets, even as tax re­ceipts out­pace his num­bers.

“It’s a dia­logue,” Atkins said. “We have to make our case.”

Brown has been re­luc­tant to com­mit to more spend­ing be­cause Cal­i­for­nia’s in­come is no­to­ri­ously un­pre­dictable. In ad­di­tion, the state still faces hun­dreds of bil­lions of dol­lars in longterm costs for re­tire­ment benefits and over­due road main­te­nance.

“When you spend to­day, you’re re­ally paving the way for mas­sive cuts to­mor­row,” the gover­nor told busi­ness lead­ers last month. “The bet­ter path is sta­ble, care­ful, sus­tain­able bud­get­ing, and that’s what we’re go­ing to have.”

Some fi­nan­cial an­a­lysts have urged law­mak­ers to ac­cept Brown’s ap­proach. Gabriel Petek, who tracks Cal­i­for­nia fi­nances at the Wall Street rat­ings agency Stan­dard & Poor’s, said higher spend­ing would likely make the state bud­get “more pre­car­i­ous.”

Oth­ers dis­agree. Chris Hoene, ex­ec­u­tive direc­tor of the Cal­i­for­nia Bud­get & Pol­icy Cen­ter, which ad­vo­cates for low-in­come fam­i­lies, noted that law­mak­ers’ ad­di­tional spend­ing re­quests are ac­com­pa­nied by larger de­posits into the state’s rainy­day fund and more money to pay off debt.

The gover­nor’s ar­gu­ment, he said, “doesn’t hold wa­ter.”

“If you can make in­vest­ments when you have the money, that’s a good idea,” Hoene said. “If you have to then walk back from those be­cause of a down­turn later, those are the tough de­ci­sions that you have to make.”

It’s not al­ways easy to de­ter­mine how much a spend­ing in­crease would cost the state in the fu­ture. A sum­mary re­leased by leg­isla­tive lead­ers in­cluded only de­tails on a sin­gle year of fund­ing for most of the changes.

The law­mak­ers’ bud­get plan, for ex­am­ple, would al­lo­cate $40 mil­lion, start­ing Jan. 1, to make public health­care avail­able to chil­dren who are in the coun­try il­le­gally.

Jesse Mel­gar, a spokesman for Sen. Ri­cardo Lara (D-Bell Gar­dens), the law­maker who pushed for the fund­ing, said the pro­posal’s fu­ture costs have not yet been an­a­lyzed. H.D. Palmer, a spokesman for Brown’s Depart­ment of Fi­nance, said the ad­min­is­tra­tion es­ti­mates the an­nual price to be $132 mil­lion.

Child care is an­other area in which fund­ing would grow, from $261 mil­lion in the next bud­get to $388 mil­lion an­nu­ally af­ter that.

There’s also $45 mil­lion to ex­pand den­tal benefits for adults en­rolled in public health­care start­ing Jan. 1. An­nual costs would be dou­ble that amount.

A pro­posal to partly roll back a re­ces­sion-era cut in state pay­ments to doc­tors who serve poor pa­tients is slated to cost about $37 mil­lion in the next bud­get. The big­gest part of the restora­tion wouldn’t start un­til April, only a few months be­fore the end of the fis­cal year, so a full year of spend­ing would be much higher, about $110 mil­lion.

Jim Mayer, pres­i­dent of Cal­i­for­nia For­ward, a public pol­icy or­ga­ni­za­tion, urged law­mak­ers to be more trans­par­ent when phas­ing in new fund­ing. Although mul­ti­year fig­ures are avail­able for peo­ple who know where to look or whom to ask, they’re rarely in­cluded in press re­leases and public state­ments.

“There should be no am­bi­gu­ity about that,” Mayer said. “It should be very clear that this is a grow­ing li­a­bil­ity.”

Slowly ramp­ing up spend­ing is one way Demo­cratic law­mak­ers have per­suaded Brown to ac­cept larger bud­gets than he has orig­i­nally pro­posed. In 2013, the fi­nal bud­get in­cluded $50 mil­lion for higher wel­fare pay­ments with the un­der­stand­ing that costs could triple in the fol­low­ing year.

That year, then-As­sem­bly­man Jeff Gorell, a Camarillo Repub­li­can, mem­o­rably de­scribed Democrats’ plans as “the mul­let bud­get”: “It’s con­ser­va­tive up front, but it’s lib­eral in the back.”

This year, the top Repub­li­cans on the joint bud­get com­mit­tee, Assem­bly­woman Melissa Me­len­dez of Lake Elsi­nore and Sen. Jim Nielsen of Ger­ber, sent a let­ter to Brown say­ing the Democrats’ bud­get “is not sus­tain­able.”

“While the state’s cof­fers have re­bounded in re­cent years,” they wrote Fri­day, “we should be care­ful not to re­peat the fis­cal mis­takes of the past by gam­bling on overly op­ti­mistic eco­nomic pro­jec­tions.”

Damian Do­var­ganes

GOV. JERRY BROWN has pushed for “sta­ble, care­ful, sus­tain­able bud­get­ing” for the next fis­cal year.

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