On a day his San Diego visit was overshadowed by fire, Gov. Jerry Brown talked up a $1.6 billion “rainy day fund” as part of his revised budget Tuesday and called on legislators to spend the reserve funds wisely.
Photos by Chris Stone
On a day his San Diego visit was overshadowed by fire, Gov. Jerry Brown talked up a $1.6 billion “rainy day fund” as part of his revised budget Tuesday and called on legislators to spend the reserve funds wisely.The state budget for the fiscal year starting July 1 totals $156.2 billion and includes $2.4 billion for Medi-Cal reform and $142 million for drought-response measures, such as firefighting, water management, wildlife preservation and food assistance.
The governor called on the state, school districts and teachers to work together to shore up the State Teachers’ Retirement System, which has a deficit of more than $70 billion.
At a San Diego City Hall news conference — one of three held around state — he displayed a chart showing dramatic variations in annual revenue from capital gains taxes in recent years and said some legislators believe the peaks are normal.
Capital gains taxes have become a key slice of the state’s revenue pie, thanks to the rapid growth of high-tech companies in Silicon Valley, biotech firms in San Diego County and entrepreneurs.
Brown said California was “in good shape” now, but urged fiscal caution.
“Looking forward, we have deferred maintenance, we have longer-term liabilities regarding health care, and judges’ health care, UC — all sorts of liabilities out there,” Brown said. “So even though we have a surplus, we have to hold onto it, and spend it wisely.”
Last week, the governor reached an agreement in principle with the Legislature on the reserve fund, which still requires approval.
- Require the state to bank large increases in capital gains revenues, which are the most volatile form of tax income.
- Require supplemental payments to accelerate the payoff of the debts and liabilities.
- Raise the dollar amount the rainy day fund to 10 percent of the general fund revenue.
- Allow withdrawals to be made from the fund when needed during recessions, within prescribed limits. and
- And create a reserve account for education to avoid future funding cuts.
The budget increases funding for K-12 schools and community colleges, and provides more money to the University of California and California State University systems — as long as they don’t increase student tuition and fees.
Revenue growth triggered a 2 percent raise for state workers who belong to 14 of the 21 state employee unions, the Sacramento Bee reported.
California has about $355 billion in long-term liabilities, including $217.8 billion in unfunded pension costs and $64.6 billion in deferred maintenance, according to the budget l released in January.
— City News Service
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