PD Editorial: Jerry Brown poised to leave a surplus and a warning

Jerry Brown says governors don’t have legacies.

Brown, the longest serving chief executive in California history, said so most recently on Wednesday as he outlined his 16th and final state budget proposal.

“Can you tell me the legacy of Goodwin Knight? Or Governor Merriam? Or Deukmejian? Governors don’t have legacies, that’s my No. 1 proposition,” he said in answer to a reporter’s question. “Look, we have a whole political system that judges our executives by the state of the economy, over which they have virtually no impact. So, you figure it out.”

It was a prototypical Jerry Brown moment, lacking only a flourish delivered in Latin.

But he may have been wrong - at least in regard to himself.

Brown, whose term ends in a little less than 12 months, is positioned to leave the state in better financial shape than he found it. That hasn’t happened since Pete Wilson left office in 1999.

It’s true that governors, and presidents, get too much credit and too much blame for economic conditions they don’t control. Brown had the good fortune to assume office as the Great Recession wound down, and a slow, steady recovery allowed the state to whittle down its record deficits.

His legacy - for good and ill - will be his insistence that California’s state government operate as if the next recession was about to begin.

Brown’s final budget plan is no exception, banking almost all of an anticipated $6.1 billion surplus. If he gets his way, he will leave behind a $13.5 billion rainy-day fund, the largest reserve in state history.

“We have our piggy bank waiting for the next governor,” said Brown, who displayed a chart showing that the current expansion is approaching the longest one in state history, which, underscoring Brown’s point, happens to track with Wilson’s tenure. “The whole point is to think ahead and minimize the pain that is coming.”

Besides the fortified rainy-day fund, he recommended a $2.3 billion contingency fund to cover unexpected costs, such as natural disasters or ripple effects from rising federal budget deficits, during the upcoming fiscal year.

For all the caution, the proposed budget is still a record $190 billion, including $6.4 billion for highway and road improvements paid for with new gas tax revenue, a big bump in funding for K-12 education and a new online community college.

Democratic lawmakers almost certainly will press for more spending, and some Republicans already are calling for tax rebates in lieu of salting so much money away in reserve funds.

Both approaches would be mistaken, in large part because of Brown’s other legacy.

To his credit, he seldom missed an opportunity during his third and fourth terms to point out the flaws in California’s tax system, which relies heavily on the capital gains of a tiny segment of the state’s taxpayers and produces volatile swings in the state’s fiscal health. When the economy falters, tax revenue plummets at the same time that demand for safety-net programs surges.

But Brown has been largely absent from efforts to adjust the tax system and smooth out the peaks and valley in state revenue, and those talks have gone nowhere. That issue awaits the next governor, along with Brown’s warning about possible economic turmoil: “What’s out there is darkness, uncertainty, decline and recession - so good luck, baby.”