PD Editorial: New governor gets to spend and save all at once
For Gavin Newsom, this is the best of times.
California’s new governor, on just his third day on the job, presented a state budget that would boost spending substantially and “the largest fiscal reserve of any state in American history.” A budget surplus in excess of $20 billion provides for a lot of political good fortune.
The headlines from Newsom’s spending plan include a record $80.7 billion for K-12 and higher education; $1.3 billion to spur housing development; $1 billion in tax credits for low-wage workers; and $500 million to build homeless shelters with on-site social services.
They are, to borrow one of Newsom’s trademark phrases, big, hairy audacious goals.
Yet he contends — with some justification — that his budget, which clocks in at $209 billion, isn’t a repudiation of his predecessor, Jerry Brown, who insisted on budgeting for the worst of times.
More than 85 percent of Newsom’s new spending is one-time investments, including a combined $4.8 billion in optional payments to CalPERS and CalSTRS to pay down unfunded pension liabilities and $4 billion to pay off the last of the state’s debts from the Great Recession.
Funding for some of his big-ticket campaign promises, including universal preschool for 4-year-olds, would be phased in over several years, with much of the first-year spending dedicated to construction.
Newsom also proposes to put $4.8 billion into reserve accounts, including the state’s rainy day fund, which would grow to $15 billion — more than 10 percent of general fund expenditures — by the end of the 2019-20 fiscal year.
“The message we are advancing here is discipline,” he said.
Some will quibble, but Newsom is basically correct. His revenue projections are conservative, and, with a few exceptions, such as increasing benefits in the CalWorks welfare-to-work program, his spending plan avoids the kind of long-term commitments that would backfire if the good times go bad. The economic recovery is approaching a record 10 years, after all.
In a week that saw President Donald Trump threaten to cut off wildfire recovery money for California, the new governor committed significant resources to disaster preparedness, including:
— Backfilling three years of lost property tax revenue in Lake and Butte counties, which have experienced multiple wildfires in recent years.
— More than $400 million in wildfire prevention spending, including expenditures for forest management and new fire engines and helicopters, retrofitting airplanes and fire-detection cameras. California’s investment stands in sharp contrast to the $2 billion reduction in federal spending for forest management since 2016.
— A $60 million jump-start on converting the 911 system from analog to digital, allowing emergency operators to receive texts and video. To complete the project, he wants to impose a fee on phone bills beginning in 2020 — an idea rejected last year by the Legislature and one that’s unlikely to be popular with consumers.
— A little more than $16 million to complete the state’s early warning system for earthquakes.
These are practical steps that will help Californians recovering from devastating wildfires, and they will better position the state to respond to future emergencies. That’s prudent planning and a welcome alternative to the bluster coming from — well, we started with Dickens, so let’s finish there — the Bleak House in Washington.
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