PD Editorial: Brown offers final, frugal budget

Gov. Jerry Brown gets lampooned at times for using Latin phrases and $20 words.

But his message about California's growing budget surplus was brief, clear - and right on target:

“Let's not blow it now,” Brown declared Friday as he laid out his revised budget proposal for the fiscal year that starts on July 1.

The state's surplus, if revenue forecasts are accurate, would be $8.8 billion under his $199 billion spending plan for 2018-19.

That's a complete reversal from 2011, when Brown returned to office for a third term after a 28-year hiatus. The budget plan he unveiled in May 2011 projected a $9.6 billion deficit for the next fiscal year and was accompanied by a long-term forecast that showed California almost $2 billion in the red for 2017-18, the current fiscal year.

Brown benefited from steady, if unspectacular, economic growth as deficits quickly faded away during his second tenure as governor. But the biggest contributor to the state's robust surplus is revenue from higher income taxes on the wealthy, which were approved by voters in 2012 and extended in 2016.

As anyone who has followed California's boom-and-bust budget cycles knows, income taxes, specifically taxes on capital gains, are extraordinarily volatile, and today's 10-figure cushion could quickly return to a 10-figure deficit when the next recession hits.

“We're nearing the longest recovery in modern history,” Brown said at his Friday budget briefing, “and as Isaac Newton observed: What goes up must come down. This is a time to save for our future, not to make pricey promises we can't keep.”

This economic twist on Newton's law informed the governor's proposal, which would divert much of the surplus into the state's rainy day reserve fund, bringing it to $13.8 billion, or 10 percent of the state general fund.

Under Proposition 98, a big chunk must go to K-14 education. Most of the rest would be earmarked for one-time expenditures, including deferred maintenance work at state buildings, funding for local mental health and homeless programs, and disaster relief for counties hit by fires and mudslides, including:

- $29 million to cover the local share of the cost of removing 2.2 million tons of debris residences in Sonoma, Lake, Mendocino and Napa counties that burned in October's fires.

- $21.8 million to backfill anticipated property tax losses this fiscal year and next for fire-affected jurisdictions in Northern California, plus $11 million for fire- and mudslide-damaged areas of Southern California.

- $96 million, on top of $160 million in the January budget proposal, for fire prevention. The money would pay for controlled burns, thinning forests and other measures to reduce the risk of wildfire across 500,000 acres of land.

Some of Brown's fellow Democrats in the Legislature are eager to expand Medi-Cal and other safety next programs, and some Republicans have suggested spending part of the surplus on, among other things, water projects. The needs are real, but so is the risk that the state would find itself overextended when the economy stalls.

Brown will leave his successor a healthy balance sheet and a rainy-day fund. But neither the governor nor the Legislature has shown much enthusiasm for fixing a tax system that produces too many peaks and valleys in the state's budget. That too awaits Brown's successor.

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