It’s May Revision time, and Gov. Jerry Brown’s budget allocations were about what everyone guessed they would be.
As the father of the Rainy Day Fund, Brown is known for his conservative financial estimates and attempts to fund long-term projects with seed money, also known as one-time payments. Another reason for one-time payments is to dedicate funds without burdening future budgets with the promise of continued money that Brown can’t guarantee will be there. This is especially crucial for infrastructure and education spending, which often include minimum baselines of the previous year’s funds.
Brown has repeated throughout his tenure that capital-gains revenue, which the state relies on for a large portion of its income tax revenue, are nearing the end of their bullish run. The state is at the far end of one of the longest economic recoveries in history and Brown expects that recovery will not last, drying up the surplus that has become habitual for the state.
This year’s May Revision calls for an $8.8 billion surplus, up from January’s $6.1 billion projection, and a $138 billion spend. A $6 billion chunk of the surplus will go toward the Rainy Day Fund’s $13.8 billion limit. Of that $6 billion expenditure, $530 million will be for IT and IT-related spending throughout the state.
This increase of funds was crucial to projects like the new sex offender registration system and any technology related to cannabis.
Before the May Revision there were precious few specifics about how the new tiered sex offender registration system, created under SB 384, would be funded or transitioned. The new system will require integrators, designers, developers and website updates. Brown put down $10 million toward the project, which is separate from the state Department of Justice’s $903,000 habitual offender fund.
Knowing that cannabis can boost state tax revenue in the future — to the tune of an estimated $185 million in 2017-18 and $630 million in 2018-19 — Brown focused a $133.3 million increase on getting regulation systems off the ground. Another General Fund loan of $59 million to the Cannabis Control Fund was also included. However, the administration has been careful to note in the May Revision that those revenues are estimates and that this could be an unstable revenue stream.
A large portion of that spending will be aimed at the cannabis Track and Trace System, licensing offices, business process systems, the tax collection systems and the IT to support all those functions. $3 million will specifically go to the California Highway Patrol to create protocols around cannabis-impaired driving, which no state has really figured out yet.
Utilizing the one-time funding tool, Brown put up $13.5 million to replace college financial aid systems while proposing reductions in state funding if either the University of California or California State University raise tuition. Another set of funds will go toward educational materials for K-12 and community colleges.
Brown’s new online community college is still under construction as the Board of Governors figures out just how to make the system work. The revision also named the online college as part of the collective bargaining unit all other community colleges enjoy and outlined another $73.7 million from Prop. 98 funds to support its buildout. These reinforce Brown’s hopes to create more access to Californians seeking career mobility and fewer instructional material cost to students.
Brown has also prioritized public safety beyond the steps being taken with the federal FirstNet effort. He set aside another $32.9 million for public safety radio systems at prisons and fire camps. Another $15 million will go toward Next Generation 911 technology and the upgrading of the Public Safety Microwave network.
The budget includes $32.9 million to replace the public safety radio communication system at the remaining nine adult institutions that have not been upgraded, two juvenile facilities, and various fire camps, and provide interoperability to the statewide transportation unit.