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California's budget surplus problem....

Posted by on May. 14, 2013 at 2:37 PM
  • 10 Replies

Democrats at odds over California budget surplus

Calif. governor prepares budget with $4.5B in higher revenue; at odds with fellow Democrats

SACRAMENTO, Calif. (AP) -- California is enjoying a revenue surplus for a change. Gov. Jerry Brownis reaping the benefits of an economic turn-around and higher taxes as he prepares to release his update Tuesday for the coming fiscal year's budget.

The stock market is surging, home prices are up and the unemployment rate is down, contributing to a revenue surge of $4.5 billion more than expected from personal income taxes.

But the Democratic governor, who has pledged to maintain fiscal restraint and build a cash reserve, faces pent-up pressure from members of his own party. Democratic lawmakers want to spend the additional revenue to make up for years of budget cuts to programs serving women, children and the poor.

Assembly Speaker John Perez, D-Los Angeles, announced his fiscal priorities last week and said he wants increased spending on child care services for the poor and college assistance for middle-class families.

"This is about responsibility. It's not about walking away from our obligations," he said.

Other Democrats are pushing to restore a wide array of safety-net programs that were eliminated or reduced during the recession, including adult dental care for the poor and mental health care. Doctors, hospitals and other health providers want the state to end a 10 percent Medi-Cal reimbursement rate cut. And children's and health advocates are pushing to restore health careservices, if not expanded to all Californians.

"He's going to be fighting his own Democrat Legislature because there's so much pent-up desire to spend," said Senate Minority Leader Bob Huff, R-Diamond Bar.

Brown included additional revenue from Proposition 30, the tax initiative approved by voters last fall, in the $97.6 billion general fund budget he announced in January for the fiscal year that starts July 1. Since then, personal income taxes, which are the state's largest source of revenue, have come in ahead of the administration's estimates.

Those collections exceeded projections by nearly $5 billion for the month of January alone.

In all likelihood, education is expected to take the largest share of that extra money under the state's funding formula, said H.D. Palmer, the governor's finance spokesman. Brown also is reluctant to commit to restoring services because the spike in personal income tax revenue may be the result of early withholdings, a one-time phenomenon.

"We have seen what happens, if you go back to the dot-com era, when the state takes one-time revenue and increases ongoing spending," Palmer said. "We don't want to see that movie again. It doesn't have a good ending."

Brown is taking advantage of the surplus to push for a new K-12 funding formula that would channel additional money to schools with high levels of low-income and non-English speaking children. He also wants to give school districts more control of the money they receive from the state.

But the governor is running into resistance from lawmakers who represent more affluent areas that would not gain as much under his plan. Democrats in the state Senate are proposing an alternative that does not include extra money for school districts where more than half of students are low-income.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, said he supports more money for children from low-income families but believes the money should follow the child — even if he or she lives in an affluent community.

Brown acknowledged last week he has more negotiating to do on his education funding change.

"There's give-and-take here; we don't issue dictates," the governor said. "But the idea of putting money where the kids have the biggest challenge in the schools or districts that have the biggest challenge because of the concentration, that's the core idea."

Another task Brown and state lawmakers have to complete is expanding the state's Medicaid program to some 1.4 million low-income residents as part of California's efforts to get ready for the Affordable Care Act, which takes full effect next year.

Democrats, who control the Assembly and Senate, disagree on details of the enrollment and implementation process while Brown is pushing for savings by reducing county support for indigent care. Democratic lawmakers and health advocates fear that even a short delay will cost California hundreds of millions of dollars in federal support.

"We want to proceed cautiously, and we don't want to bite off any more than we have to chew," Brown said last week.

He has pledged to hold the line on spending and build a rainy day fund. His administration has proposed winnowing the state's estimated $27.8 billion short-term debt to $4 billion over the next four years.

Republicans say the governor is not as fiscally restrained as he seems.

They have been sidelined from budget talks since voters approved a rule change in 2010 that allows the Legislature to pass a budget by simple majority vote, rather than a two-thirds supermajority.

"The governor does talk pretty well about staying fiscally conservative, and yet he does talk about high-speed rail and some other things that are definitely not of that ilk," Huff said.

Brown is championing the $68 billion high-speed rail system despite a decline in public support and questions over how the project will be financed.

The governor's not just feeling pressure from Democratic lawmakers. Advocates for children and women are aggressively lobbying to restore health care, child care and other safety-net programs at the Capitol this week.

A coalition of children's health and autism support organizations, for example, said some children are not getting the treatment they need since the state moved nearly 1 million children from the Healthy Families program to the state's Medicaid program, known as Medi-Cal.

Ted Lempert, president of Children Now, called the issue "a shameful failure" that the state has known about for months.

Meanwhile, advocates for the poor say women with children have been disproportionately hurt by child care cuts. The state limited welfare assistance to two years instead of five, while reducing programs that provide job training, education and job placement.

by on May. 14, 2013 at 2:37 PM
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sweet-a-kins
by Emerald Member on May. 14, 2013 at 2:39 PM

Budget surpluses spur tension in some GOP states

May 13, 2013 | Modified: May 13, 2013 at 7:01 pm
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Photo -   This combination of undated file photos shows Republican Governors Rick Perry, left, of Texas and Rick Snyder, of Michigan. After winning majorities in more than half the statehouses on principled platforms of making government smaller, Perry, Snyder and other and Republicans who control a majority of the state capitols in the United States are facing a philosophical dilemma _ what to do with all the money where an improving economy has suddenly created a surplus in revenues. (AP Photo/File)
This combination of undated file photos shows Republican Governors Rick Perry, left, of Texas and Rick Snyder, of Michigan. After winning majorities in more than half the statehouses on principled platforms of making government smaller, Perry, Snyder and other and Republicans who control a majority of the state capitols in the United States are facing a philosophical dilemma _ what to do with all the money where an improving economy has suddenly created a surplus in revenues. (AP Photo/File)

JEFFERSON CITY, Mo. (AP) — Turns out that cutting was the easy part. Now Republicans who control a majority of the state capitols in the United States face a far greater philosophical dilemma — what to do with all the money when an improving economy suddenly creates a surplus in revenues.

Save it? Refund it though tax cuts? Or spend it?

Though they won majorities in more than half the statehouses on principled platforms of making government smaller, some Republicans now are feeling tremendous pressure to spend newfound money on roads, buildings and schools that had been neglected or cut during the recession-induced downturn of recent years.

"Everybody wants that money," said North Dakota Senate Majority Leader Rich Wardner, where an oil industry boom has fueled one of the largest per capita budget surpluses in the nation.

Only a few states still face budget difficulties several years after the Great Recession forced widespread cuts to public education and social services, according to a new report by the National Conference of State Legislatures. To the contrary, a growing number anticipate that they will finish the 2013 fiscal year with surpluses, some totaling hundreds of millions of dollars.

That has created new tensions in places such as Michigan, Missouri and Texas, where GOP majorities are wrestling with the morality of spending money.

"I like to save money, I like to keep it in the bank, I like to give it back to the taxpayers," said Missouri House Budget Committee Chairman Rick Stream, a self-described fiscal conservative from suburban St. Louis. "But sometimes, you also have to spend money on big capital improvements to move the state forward."

Tax revenues that are running more than 11 percent above last year have given Missouri's largest Republican majority since the Civil War a budget surplus that they estimate at more than $400 million. As recently as a few weeks ago, Stream adamantly opposed spending much of that money. But he now has agreed to use about $120 million to construct an office building in Jefferson City, make repairs to the Capitol and state parks and draw up designs for a new mental hospital. Through such spending now, he said, the state will "save a lot of money down the road."

How states choose to handle their surplus revenues will provide a good first test of whether Republicans can make the cuts they enacted during tough times stick during better times, or whether government will return to its pre-recession levels. Those decisions could depend on whether lawmakers view the financial influx as lasting.

A recent Rockefeller Institute of Government report warned that the surge may be blip caused by wealthy taxpayers taking profits in 2012 to avoid getting hit by a federal tax hike in 2013.

The save-verses-spend conflicts are mounting in a number of states.

Michigan Gov. Rick Snyder — a Republican who is a former accountant — is pushing to sock away more money in a state savings account that already is at its healthiest level in about a dozen years. But some in the Republican-led Senate have other GOP-friendly uses for the money.

Although Snyder recently staved off a plan for more emergency dredging in Great Lakes harbors, other GOP lawmakers would like more tax incentives for the film industry or to avoid hunting and fishing fee increases.

A revenue surge also has stirred turmoil among Texas Republicans, who are especially zealous about small government. After previously cutting $15 billion from the state budget, lawmakers convened in 2013 to learn they had $8.8 billion more in revenues than projected.

With the state at its constitutional spending limit, the Texas Senate wants to ask voters to approve using $2 billion to develop more water resources, $2.9 billion for roads and bridges and $800 million for public schools. But tea party conservatives, along with Gov. Rick Perry, are calling for tax cuts. Perry says the state already spends plenty on education, even after it cut $5.4 billion from the schools' budget in 2011.

"We have challenges when we don't have money in this legislative body, and we have even bigger challenges when we do," said Texas Rep. Brandon Creighton, a Republican from Conroe.

Republican-led legislatures in Mississippi and Tennessee voted earlier this year to pour millions of dollars into their savings funds.

But in North Dakota, an oil-development bonanza has pumped so much tax revenue into government coffers that the state of about 700,000 residents now boasts a nearly $2 billion surplus — even after doubling the size of its budget over the past decade.

The newfound wealth has placed unprecedented demands on lawmakers for spending on roads, schools, law enforcement and emergency medical services. The Legislature recently agreed to provide more than $1.1 billion to help western North Dakota communities affected by the oil boom. But some lawmakers said the record appropriation still was not adequate to meet the swelling demands while others complained that the spending was not benefitting their parts of the state.

Wardner, a Republican from Dickinson who has spent 22 years in the Legislature, said the influx of money has created "more tension in the chambers" and made it harder to craft budgets.

"In the past, we just said 'no,' because we didn't have the money, and we were done with it," Wardner said. "Now if we say 'no,' they say 'we have the money.'"

___

..MoonShine..
by Redwood Witch on May. 14, 2013 at 2:43 PM
Prop 30 was intended for schools, it really shouldn't go anywhere else.
MelanieJK
by Silver Member on May. 14, 2013 at 2:47 PM
1 mom liked this

28 billion in short term debt is pretty high for a state!      He should definitely use the surplus to pay that down and build a rainy day fund until the surplus is a little more secure.    It can disappear in the blink of an eye in this economy.

MelanieJK
by Silver Member on May. 14, 2013 at 2:50 PM
1 mom liked this

 Never vote for taxes where there's even an emergency option to put them in the general fund.   


Quoting ..MoonShine..:

Prop 30 was intended for schools, it really shouldn't go anywhere else.


 

..MoonShine..
by Redwood Witch on May. 14, 2013 at 2:52 PM
It needed to happen. The consequences for schools if it didn't were no bueno.

Quoting MelanieJK:

 Never vote for taxes where there's even an emergency option to put them in the general fund.   




Quoting ..MoonShine..:

Prop 30 was intended for schools, it really shouldn't go anywhere else.



 

MelanieJK
by Silver Member on May. 14, 2013 at 3:54 PM
1 mom liked this

 

Don't buy that crap either.    If they were raised to prevent a disaster in the schools they'll have no problem putting the restriction in IF you refuse to vote for it if they don't.    

Quoting ..MoonShine..:

It needed to happen. The consequences for schools if it didn't were no bueno.

Quoting MelanieJK:

 Never vote for taxes where there's even an emergency option to put them in the general fund.   


 


Quoting ..MoonShine..:

Prop 30 was intended for schools, it really shouldn't go anywhere else.

 


 


 

pj2becca21
by Bronze Member on May. 14, 2013 at 3:55 PM

Yes but he can spend it on out of state progams as he deams nessary. 

Quoting ..MoonShine..:

Prop 30 was intended for schools, it really shouldn't go anywhere else.


Carpy
by Ruby Member on May. 14, 2013 at 4:07 PM
2 moms liked this
California does not have a budget surplus. Governor Brown is projecting and then revisins will be made just like they always do.
sweet-a-kins
by Emerald Member on May. 14, 2013 at 4:38 PM
I know how much you want American states to fail for your agenda

But it's not happening

Many states are seeing the same- see the first reply

Guess them republicans are lying too?

Nope



Quoting Carpy:

California does not have a budget surplus. Governor Brown is projecting and then revisins will be made just like they always do.
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Carpy
by Ruby Member on May. 14, 2013 at 4:40 PM
1 mom liked this
Keep dreaming.

Quoting sweet-a-kins:

I know how much you want American states to fail for your agenda



But it's not happening



Many states are seeing the same- see the first reply



Guess them republicans are lying too?



Nope







Quoting Carpy:

California does not have a budget surplus. Governor Brown is projecting and then revisins will be made just like they always do.
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