California Gov. Jerry Brown presented his May revise of the budget last week by increasing spending nearly $6 billion from an earlier proposal in January.
Brown's new budget calls for a $137.6 billion general fund. It projects an $8.8 billion surplus, the largest since the 2000-01 state budget cycle. The surplus increased nearly $3 billion from the figure budget officials projected in January mostly because revenue during the busy April tax-filing season came in higher than expected.
While the Democratic governor insists on saving the majority of the state's surplus to protect spending during a future recession, boosting California's rainy day fund to nearly $14 billion to "weather a storm that will be more like $60 billion," some Republicans are calling for taxpayer relief.
"With the $8.8 billion surplus, our state should focus on investing rather than spending," said state Assemblyman Heath Flora. "That means paying down state debts, building our rainy-day reserves and preparing our state's infrastructure for the future. Obviously, I'd like to see taxpayers get that money back, but once the government gets ahold of your money, it's pretty much impossible to get them to let go."
The Assembly budget committee's ranking Republican, Jay Obernolte of Hesperia, said the surplus means there was no need for the state to impose a $52 billion gas tax to pay for transportation projects. Casting the deciding vote for that increase was state Senator Anthony Cannella, R-Ceres.
"With our current $8.4 billion surplus, it's clear that there was no need for the Legislature to pass a $52 billion gas tax," said Obernolte. "Surely our state could have prioritized spending to pay for maintaining our roads. We need to focus on wisely investing this surplus to pay down debt and make one-time expenditures in modernizing our state's crumbling infrastructure. We also need to prioritize funding for programs that keep our communities safe and make California more affordable. As it is, California working families are struggling to survive in our high tax climate and we need to look at ways to lower their tax burden."
Assemblywoman Melissa Melendez, a Republican from Lake Elsinore said Brown's budget is "the stuff of fiction" and that to pronounce California has a budget surplus is ridiculous "when the state is staring down more than $200 billion in outstanding debt and liabilities."
Cannella said he is encouraged that the economy is "holding strong" but said "although the state has solid reserves, we must spend taxpayer dollars cautiously on only what is needed to improve our infrastructure, including improving our roads and building much-need water storage like the Temperance Flat Reservoir, to maintain a robust economy."
Brown has repeatedly warned that California is riding a wave of economic growth and the budgetary good times will eventually end. The governor has generally resisted new ongoing spending on social services that he believes can't be sustained.
"All the people who want things won't be getting what they'd like to have," Brown said, warning that the state is "on the peaks and we're about to head down into the valleys."
Still, on Friday he proposed $2 billion for infrastructure, including universities, courts, state facilities and flood control and $359 million to help local governments address homelessness.
Assembly Democrats said they'll push for a $1 billion boost in spending on health care, including $250 million to provide state-funded health coverage to low-income illegal aliens through the Medi-Cal program. Their proposal would also provide money to offset monthly premium costs for people who buy their own insurance coverage.
They have also proposed expanding the "earned-income" tax credit to help the working poor. Brown's proposal included a partial expansion for adults up to age 25 and seniors 65 and older.
Senate Democrats are eager to boost monthly payments for CalWorks, the state welfare program, which have not been raised for years.
Brown's $137.6 billion spending plan reflects money from the general fund, the state's main bank account. His proposal is $199.3 billion when including bonds and special funds, which are restricted for specific purposes.
By law, about half of the budget is automatically directed to K-12 education and community colleges.
Brown is continuing to push his proposal first announced in January to create a new online community college that would primarily serve working adults. His administration has aggressively worked to sell lawmakers on the plan and said recently that the first curriculum would be a certificate in medical coding.
He said Thursday that his budget proposal includes $96 million for a variety of efforts to prevent wildfires, including doubling the amount of land that's actively managed through vegetation thinning, controlled burns and reforestation.
California firefighters and fire chiefs have asked for $100 million for overtime, equipment and dispatchers to better prepare for potential fires during risky weather conditions.
Brown will negotiate a final spending plan with Democratic legislative leaders. The Assembly and Senate have until June 15 to pass a budget under the state Constitution. If they're late, lawmakers' pay will be docked.
Brown has presided over a stark turnaround in California's finances. The state's budget, which has historically been subject to steep highs and deep lows, has grown 45 percent since 2011, when he took office facing a $25 billion deficit thanks to significant income growth among wealthy taxpayers. Forty percent of California's personal income tax revenue comes from people earning $1 million or more per year.