How long will Gavin New­som ride a good econ­omy?

The Fresno Bee (Sunday) - - Obituaries - BY DAN WAL­TERS CALMat­ters Dan Wal­ters is a colum­nist at CALMat­ters. He can be con­tacted at dan@calmat­

Gavin New­som is one lucky fel­low.

Not only did he coast into the gov­er­nor­ship of the na­tion’s rich­est and most pop­u­lous state with to­ken op­po­si­tion, but he will be only the sec­ond gov­er­nor of the past half­cen­tury to be in­au­gu­rated without a se­vere bud­get cri­sis.

Leav­ing whop­ping deficits to suc­ces­sors, thus forc­ing them to raise taxes, has been some­thing of a tra­di­tion among Cal­i­for­nia gov­er­nors in re­cent decades. But Jerry Brown, who left one for his first suc­ces­sor, Re­pub­li­can Ge­orge Deuk­me­jian, in 1983, isn’t im­pos­ing that af­flic­tion on New­som.

Brown cham­pi­oned a hefty in­crease in taxes to close the yawn­ing bud­get deficit he in­her­ited from Arnold Sch­warzeneg­ger in 2011. That tax hike, cou­pled with an ex­pand­ing econ­omy, gen­er­ated a flood of money into the state trea­sury.

An­nual gen­eral fund rev­enues jumped $30 bil­lion or nearly one-third in seven years, mostly from per­sonal in­come taxes on wealth­ier Cal­i­for­ni­ans. While spend­ing also in­creased sharply — es­pe­cially a 50 per­cent in­crease in per-pupil spend­ing on K-12 ed­u­ca­tion — Brown tem­pered am­bi­tions in a lib­eral Leg­is­la­ture for vast new en­ti­tle­ment pro­grams and in­sisted on cre­at­ing and fill­ing a “rainy day fund” to cush­ion the im­pact of a fu­ture re­ces­sion.

Through Septem­ber, rev­enues for the 2018-19 fis­cal year were run­ning $1 bil­lion over the bud­get’s fore­cast. New­som, there­fore, should eas­ily fash­ion a balanced 201920 bud­get for in­tro­duc­tion just three days af­ter his in­au­gu­ra­tion in Jan­uary.

That doesn’t mean, how­ever, that New­som can con­tinue to coast on the bud­get, eas­ily the sin­gle most im­por­tant as­pect of gov­ern­ing Cal­i­for­nia. For one thing, the eco­nomic boom that Brown en­joyed dur­ing his sec­ond gov­er­nor­ship has al­ready lasted much longer than nor­mal and, as he con­tin­u­ously warns, Cal­i­for­nia is over­due for a re­ces­sion.

For an­other, Brown’s rainy day fund tops out at about $16 bil­lion, but his De­part­ment of Fi­nance has cal­cu­lated that even a mod­er­ate re­ces­sion could cut an­nual gen­eral fund rev­enues by $60 bil­lion over three years. That re­flects the state’s ut­ter de­pen­dence on taxes from a rel­a­tively few very high­in­come Cal­i­for­ni­ans, a syn­drome that Brown’s 2012 tax in­crease, later ex­tended by vot­ers, has wors­ened. Iron­i­cally, there­fore, the fac­tors that al­lowed Brown to right the state’s fis­cal ship could make bal­anc­ing the bud­get more dif­fi­cult for New­som when the in­evitable eco­nomic down­turn oc­curs.

Fi­nally, there are New­som’s own am­bi­tions, re­flect­ing his left-of-cen­ter po­lit­i­cal base. As he claimed vic­tory in the June pri­mary, New­som laid out his agenda for cheer­ing sup­port­ers: “Guar­an­teed health care for all. A ‘Mar­shall Plan’ for af­ford­able hous­ing. A mas­ter plan for ag­ing with dig­nity. A mid­dle-class work­force strat­egy. A cra­dle-to-col­lege prom­ise for the next gen­er­a­tion. An all-hands ap­proach to end­ing child poverty.”

The New­som wish list would be costly, eas­ily tens of bil­lions of dol­lars. But he’s been coy about pay­ing for it, sug­gest­ing that some­how his man­age­rial acu­men would make it hap­pen. Late in the cam­paign, with vic­tory in sight, he pulled back a lit­tle, say­ing he wanted to em­u­late Brown’s cau­tious ap­proach to state fi­nances.

New­som can prob­a­bly jug­gle his seem­ingly con­tra­dic­tory bud­getary po­si­tions for a while. Brown and the Leg­is­la­ture bought him some time on health care by pass­ing a bud­get “trailer bill” that cre­ates a blue-rib­bon com­mis­sion to study health care for a few years.

How­ever, sooner or later he must put up or shut up on that and other items on the agenda that pleased lib­eral vot­ers. In that sense, a re­ces­sion would al­most be an­other lucky break for New­som, al­low­ing him to fudge on his prom­ises without bear­ing the po­lit­i­cal cost for reneg­ing.

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