For weeks there were signs of a potential California budget fight between Governor Jerry Brown and Democratic legislators, with the press spinning it up a bit. The Legislative Analyst Office was estimating billions more in revenue than the Brown administration. Democratic interest groups were urging more spending on social programs. Then at the beginning of the week the Democratic majority legislature passed a budget more than $2 billion higher than Brown's revised budget proposal of May.
But a few days later, Brown appeared with state Senate President Pro Tem Kevin de Leon and Assembly Speaker Toni Atkins to commend their sudden agreement on a budget just $61 million higher than Brown's May proposal, mostly to extend state health coverage to the children of lower-income illegal immigrants, with the other $2 billion-plus in social spending pushed aside by Brown. The state budget is being passed on final legislative votes today. Why did Brown so quickly prevail?
Governor Jerry Brown appeared with state Senate President Kevin de Leon and Assembly Speaker Toni Atkins to discuss their agreement on the state budget, almost entirely along lines already proposed by Brown.
Because Brown has the whip hand and the willingness to use it, as his historic state budget veto of 2011 demonstrated. And because the public is with Brown on fiscal matters, as polling shows.
Even though lower state courts ruled against then-state Controller John Chiang's stoppage of legislators' pay in 2011 for failing to produce a properly balanced budget on time as required by 2010's Proposition 25, which seemed to many in the press to take away much of Brown's potential leverage.
The reality is that advocates of more spending didn't have the votes to override another Brown budget veto. With public opinion mostly on Brown's side of fiscal prudence, Democratic legislative leaders would have found the controversy hot. And if things dragged on, much of the public would have been angered to learn that the legislative pay stoppage they thought they had authorized when they passed Prop 25 was no longer a factor. At least at questionable local and appellate court level readings of intent.
The state government had a $27 billion budget deficit when Brown became governor again in 2011. He left a $1 billion budget deficit after his first two terms as governor in the 1970s and 1980s. He has a big surplus now and clearly intends to keep things that way at the end of this, his record fourth and final term.
Brown knows that the economy can always turn down, as it did at the end of his second terming the early '80s.
California got itself into a chronic budget crisis at the beginning of this century because of steps taken during the dot-com boom of the late '90s and early Noughties, when Republican Governor Pete Wilson cut the car tax and Democratic Governor Gray Davis, against his instincts and at the urgings of Democratic legislative leaders, signed new spending programs into law. When the dot-com boom became the dot-com bust -- which might happen again -- permanent new programs were missing their evanescent new revenues.
I'll always remember then Assembly Budget Committee chair Jenny Oropeza, who was loathe to institute big cuts, insisting to me as the deficit mounted under Davis that Republicans, some of whose votes were needed to meet the two-third tax hike standard, would go along with a tax increase. They did not, of course, and Davis's governorship foundered, leading to his October 2003 recall and the advent of Arnold Schwarzenegger.
Brown did respond in his annual "May Revise" of the budget to calls for a big state response to equalize the very uneven economic recovery. He rolled out a new earned income tax credit for low-income workers. But that costs less than $400 million.
The big response, it seems to me, to calls for economic relief in what is plainly a society of accelerated economic inequality is the great expansion of the low-income Medi-Cal health care program as part of the state's very full embrace of Obamacare. One-third of Californians are now eligible for Medi-Cal. And costs will go up, in part because doctors want to get paid more to treat the new patients.
While the legislature and Brown will turn their summer attention to revenue needs for roads and highways -- more fuel-efficient cars mean gas tax revenues aren't keeping up -- and health care, maintaining a healthy surplus provides very useful flexibility.
Will some form of new revenues, i.e., potential taxes, be on the table? You bet. Unlike his stance in his 2010 landslide victory over eBay billionaire Meg Whitman, Brown did not pledge in his even bigger landslide victory last year over former Wall Street bailout coordinator Neel Kashkari not to institute a tax increase without a public vote.
But as Brown and Democratic legislative leaders ponder their options, they have to do so mindful of the fact that California voters are not so keen on new taxes, as the polling shows.
There's no question that California is now a blue state. But that can be overstated.
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