Gov. Jerry Brown proposed a $122.5 billion general fund budget Tuesday and warned of a looming $1.6 billion budget deficit, absent spending cuts, because of slower than expected growth in tax revenues. The state also faces uncertainty about federal funding under the incoming Donald Trump administration. Here’s a look at how some state priorities would be affected by Brown’s proposals:
School funding makes up more than half of the budget thanks to the school-funding guarantee Proposition 98, which voters approved in 1988. Falling income tax revenues would mean schools would likely take a hit in future years, but it’s still uncertain how much. Brown’s budget proposal forecasts a 3.1 percent increase to K-12 education over the current budget, roughly $1.6 billion more. That would boost per-pupil spending by about $400, to $15,216 per student. The governor’s budget also proposes a $184 million increase in higher education funding, up 1 percent from the current year.
California’s health care program for the poor, Medi-Cal, is projected to cover 14.3 million people — about a third of Californians — in the 2017-18 budget year, but funding for the program is at risk as President-elect Donald Trump and Republicans in Congress have vowed to repeal the federal health care law. Brown’s budget does not directly address what California would do if more than $15 billion in federal subsidies for new enrollees are withdrawn, but it includes about $800 million in higher costs for California’s share. Brown also wants to cut a program known as the coordinated care initiative, which allows people who are eligible for both Medicare and Medi-Cal to receive all their care through a single health plan, which his administration says would save $626 million in 2017-18.
For a third year, Gov. Jerry Brown is bringing back his proposal to address a multibillion-dollar backlog in transportation infrastructure repairs and upgrades through tax increases. The plan would raise $43 billion over 10 years from several sources, including: $2.1 billion a year from a new $65 fee on all vehicles, including hybrids and electrics; $1.5 billion a year from higher gasoline and diesel taxes; and $500 million more annually from California’s cap-and-trade fees on polluters. The Brown administration says it wants to prioritize repairs and maintenance to existing infrastructure and make major new investments on highways and local roads. But Brown’s plan and others calling for tax increases have repeatedly stalled in the Legislature, with Republicans and moderate Democrats reluctant to back the higher taxes.
Spending on the Department of Corrections and Rehabilitation budget increases 3.3 percent, to $11.3 billion from $10.55 billion in the current fiscal year. The budget includes savings of $22.4 million from voters’ approval of Proposition 57 sentencing changes in November, which are projected to lower the inmate population by 2,000 in the first year. A $250 million increase would go to absorbing nearly 2,000 Department of State Hospitals employees who work in three mental health facilities within state prisons. The budget also includes $42.9 million for community rehabilitation programs through a voter-approved lowering of penalties for some drug and property crimes, an increase of $3.5 million over the current year.
The governor proposes spending $2.2 billion in cap-and-trade auction proceeds on programs to protect the environment, but only if a two-thirds majority of the Legislature approves an extension of the program beyond 2020. The cap-and-trade program requires California companies to buy permits to pollute, generating revenue to spend on energy conservation efforts and other programs.
If it’s extended, the governor’s spending plan would allocate $375 million for the high speed rail project, $363 million for a low-carbon transportation program to curb oil use and $300 million for an initiative to reduce greenhouse gas emissions in low-income communities. The cap-and-trade program faces an uncertain future amid a court challenge.