Gov. Jerry Brown released a revised $124 billion budget proposal Thursday that forecasts slightly higher state revenues than earlier this year.
His new general fund budget blueprint allocates new spending for schools and child care, as well as paying down pension debt and saving money in the state’s rainy day fund.
While the state’s revenue projections are $2.5 billion rosier than those forecast in January, they are worse than what was anticipated a year ago. For that reason, Brown said he put forward a fiscally responsible revised budget because “who knows what it will be in six months?”
The odds, Brown said, is California will be in recession soon. In fact, there have been 10 recessions and 10 recoveries since World War II, and the state is just two years shy from having the longest economic recovery on record, a point he illustrated with one of several charts on stage. The state is in its eighth year of economic recovery.
“We’ve got ongoing pressures from Washington, and the economic recovery is not going to last forever,” Brown told journalists gathered for his press conference in Sacramento.
A moderate recession would drop state revenues by about $20 billion annually for several years, according to the governor’s budget document.
Lawmakers have until June 15 to approve a balanced budget. The leadership and budget committees will spend the next month hashing out the details and try to include their own funding priorities. The latest revenue projections will influence hundreds of bills awaiting action by fiscal committees.
The May revision assumes the economy will continue to grow and projects a $3.3 billion shortfall compared to the $5.8 billion shortfall predicted in January, a slight uptick thanks to higher capital gains revenues.
Those gains led Brown to include $1.4 billion in his 2017-2018 revised budget to continue to implement the Local Control Funding Formula, with funding directed to districts with low-income students, English learners and students in foster care. He also changed course on his earlier budget proposal to delay a rate increase to child care providers.
Despite referencing the possibility of billions of dollars in federal health-care cuts, Brown said his revised budget does not assume Congress will repeal the Affordable Care Act. Although his budget plan notes the repeal legislation approved by the U.S. House earlier this month would cost the state an estimated $4.3 billion in lost federal funds in 2020.
“What we would have to do is ugly. No one wants to take that up yet,” Brown said. “So, what we’re doing is we’re going to fight as hard as we can so that doesn’t happen.”
And, he noted, he put forward a prudent budget that takes into account the risks ahead.
