On Thursday, the governor rushed out his proposed 2014-15 budget as the proposal had been prematurely leaked. According to a release from the governor’s office, Governor Jerry Brown is “vowing to keep the state on a path to long-term fiscal stability,” by proposing “a balanced budget that pays off more than $11 billion in debt and builds a lasting rainy day fund while continuing to invest in public schools and expand health care coverage for millions.”
“With a decade of intractable deficits behind us, California is poised to take advantage of the recovering economy and the tens of thousands of jobs now being created each month,” said Governor Brown. “But given the vagaries of the business cycle, we must be ever vigilant in the commitment of public funds. Wisdom and prudence should be the order of the day.”
“When Governor Brown took office, the state faced a massive $26.6 billion budget deficit and estimated annual shortfalls of roughly $20 billion. On Governor Brown’s watch, the state eliminated these deficits with billions of dollars in cuts and new temporary revenue approved by California voters,” the Governor’s office claimed.
Reaction to the governor’s budget naturally was mixed. The California Teachers Association praised the budget, arguing it will help “California schools heal after years of devastating cuts.”
CTA President Dean Vogel released a statement arguing, “California teachers appreciate the governor’s continued commitment to public education and to repaying the billions of dollars that had been cut from students, schools and colleges.”
“The governor’s proposed budget will help our public schools and colleges continue to heal after years of devastating cuts. As we heal our schools, we heal our communities,” he stated. “This budget will allow local school districts to continue to restore critical programs and provide the resources that educators need to help students learn.”
“We look forward to working with the governor and the Legislature on this state budget, as well as a plan to address the CalSTRS shortfall,” Mr. Vogel added. “Making sure educators have a secure retirement is critical to attracting and keeping quality educators in the profession. The state must ensure the retirement commitments made to our hard-working teachers.”
Senator Lois Wolk called it “a budget for a recovering economy.”
“The Governor’s budget pays off more than $11 billion in debt and builds the state’s reserve while reinvesting in public schools and the courts, both of which have experienced significant budget cuts in recent years,” she said.
“This budget strengthens the safety net for the state’s neediest and most vulnerable residents with proposals including a three year pilot child-care program for low income parents seeking employment,” Senator Wolk continued.
“The Governor’s budget supports expanding local governments’ access to Infrastructure Financing Districts, which enable governments to pay for public works projects without impacting school district’s share of property tax or the state general fund,” she said. “I am pleased to see that the Governor supports this concept, which is very similar to legislation I have twice authored. I look forward to working on this budget with the Governor and my colleagues in the Legislature.”
Assemblymember Mariko Yamada applauded “the continued restraint and responsibility reflected in Governor Brown’s budget proposals.”
“Attention to our state hospitals and developmental centers, along with additional resources to strengthen protections for some of our State’s most vulnerable residents is also encouraging,” she said. However, “At the same time, the blanket prohibition of federally-authorized overtime for In Home Supportive Services (IHSS) caregivers is a ‘one-size-fits-all’ approach to a program that for four decades has respected consumer-choice and consumer direction. As Chair of the Assembly Aging and Long Term Care Committee, I look forward to contributing to the dialogue on this issue.”
Senator Leland Yee was pleased “to see more investment in California’s public schools with an increase of over $600 in per student spending and a proposed tuition freeze at UC and CSU.”
No New Money for Redevelopment
Governor Brown’s budget does throw a small bone to Senator President Pro Tem Darrell Steinberg by proposing reducing the voter approval threshold from 2/3rds for special local issues such as bonds and tax increases; the threshold would be lowered to 55% for local governments to issue bonds for public works projects, known as infrastructure financing districts (IFDs).
However, the indication is that there will be no meaningful legislation on RDA until after the election.
The governor argues, “The elimination of RDAs was necessary to avoid further reductions in core services. Given that current compliance levels with the RDA dissolution statutes is improving, the Budget proposes expanding the tax increment financing tool utilized by IFDs for a broader array of uses than that which is currently authorized under law.”
For instance, the plan would “expand the types of projects that IFDs can fund to include military base reuse, urban infill, transit priority projects, affordable housing, and associated necessary consumer services.”
“The goal is to maintain the IFD focus on projects which have tangible quality‑of‑life benefits for the residents of the IFD project area,” the governor proposed.
Moreover, it will “allow cities or counties that meet specified benchmarks to create these new IFDs, and to issue related debt, subject to receiving 55‑percent voter approval.”
It will also “allow new IFD project areas to overlap with the project areas of the former RDAs, while strictly limiting the available funding in those areas to dollars available after payment on all of the former RDAs’ approved obligations.”
Finally, it will “maintain the current IFD prohibition on the diversion of property tax revenues from K‑14 schools, which will ensure any usage will have no state General Fund impact, and require entities that seek to establish an IFD to gain the approval of the county, cities, and special districts that would contribute their revenue, including residual revenue, to the IFD.”
The governor proposes, “The expansion of the use of IFDs should not come at the expense of the continuing RDA dissolution process.”
The governor argues, “Providing these enhancements to existing IFD statutes will provide cities and counties with enhanced options, while also ensuring the impacted local agencies have a voice in whether they will contribute their revenue to those projects and, if so, how their revenues will be used. This proposal will also help ensure the new tools are available for key local priorities such as urban infill, transit‑oriented development, and the provision of affordable housing.”
The proposal does widen the amount of projects IFDs can fund and lowers the threshold, but it is far from a replacement of RDA. At best, cities may see the lowering of thresholds as a first step toward new development options.
—David M. Greenwald reporting