What a difference a few years and a $6 billion tax increase make.
The state Legislative Analyst’s Office issued its annual fiscal outlook last week showing that under current policies, California state government will have a $5.6 billion reserve by the end of the next fiscal year.
How different the fiscal outlook was in 2008: “The state’s revenue collapse is so dramatic and the underlying economic factors are so weak that we forecast huge budget shortfalls through 2013-14 absent corrective action.”
And in 2009: “Our forecast of California’s General Fund revenues and expenditures shows that the state must address a General Fund budget problem of $20.7 billion between now and the time the Legislature enacts a 2010-11 state budget plan.”
And in 2010: “Our forecast of California’s General Fund revenues and expenditures shows that the state must address a budget problem of $25.4 billion between now and the time the Legislature enacts a 2011-12 state budget plan.”
And in 2011: “Estimated 2012-13 Budget Problem of $13 Billion.”
In 2014, an election year, legislators will be tempted to spend heavily on favored programs and dream up new ones they think will win them votes. They need to resist that temptation.
Gov. Jerry Brown, correctly urging prudence last week, has the good fortune of governing at a time of surplus, a surplus he is at least in part responsible for creating. He, too, should not waste it by caving to interest groups in 2014, when he almost certainly will be running for re-election.
The legislative analyst’s annual fiscal outlook reports often serve as buzz-kills for legislators. This one is no different. The report makes clear that happy times could sour fast if there is even a modest recession.
The report wisely urges lawmakers to build an $8 billion reserve by 2016 by socking away no less than $1.9 billion a year. The state also should use additional tax revenue to pay down what Brown calls the wall of debt, and tackle huge unfunded pension liabilities.
Importantly, public schools and community colleges will receive billions more, as a result of California’s education funding formula. The analyst suggests adding modest sums to existing programs that have received little or no increases for years, and to a few new programs.
Rates paid to physicians and other health care providers for poor and elderly people ought to be at or near the head of the line. Making sure there are enough doctors will become increasingly important as more Californians sign up for Obamacare.
Another worthy investment would be to restore job training programs cut when the budget situation was bleak. California’s prison system remains crowded. Lawmakers should try to use part of the tax revenue to reduce recidivism by putting more money into rehabilitation programs and aid to parolees who are mentally ill.
Voters were right to approve Proposition 30 last November authorizing the annual $6 billion tax increase. They also authorized majority vote budgets, and have given Democrats control over the executive and legislative branches of government.
Brown and legislators need to use that power by spending as if it’s their own money: save for the downturn that surely is coming, invest modestly, and resist election-year urges to squander taxpayers’ money on pet programs for their political allies.