California's budget comes with record spending … and a call for restraint

Gov. Jerry Brown holds a budget chart as he discusses his proposed 2016-17 state budget at a news conference in Sacramento Calif. The ballooning costs are an issue Brown will face in his final year in office despi

Gov. Jerry Brown this week predicted that his 2012 pension law will survive union challenges in court and blow a hole in the so-called "California rule" that has restricted changes to public employee retirement plans for half a century. Between now and the end of June when the budget is approved, the governor and state legislators will need to measure the impact. This year, with only six months of taxing, the budget estimates $175 million in pot taxes.

"The key to this budget is to fill up the rainy day fund", he said. His proposed budget, drenched in a $7 billion surplus, spends money sparingly, dumps dollars into a record rainy-day fund, and dodges big-ticket programs favored by his would-be successors.

Brown's presentation warned that leaner times are near. He's aiming for a middle course between fellow Democrats who want expanded social services that are still suffering from a decade-old recession, and minority Republicans who see booming revenue flows as a reason for refund checks in the mail.

Assemblyman Vince Fong, a Republican from Kern County and a former staffer of House Majority Leader Kevin McCarthy, said the forecast windfall was evidence that a gasoline tax increase passed by Democrats previous year was unnecessary. Assembly Budget Chair Phil Ting has laid out numerous proposals for the projected budget surplus.

Brown also expressed concerns that the new federal tax bill would hit high-end taxpayers in California and tempt them to leave the state.

Republicans, meanwhile, said the surplus should go back to Californians who are burdened with high taxes, including a new gas tax increase expected to generate $5 billion for road repairs. The Senate is committed to protecting that progress, and building for the future with this budget.

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Brown's budget plan would also spend an additional $59 million in bonds and special funds, which are revenue sources dedicated to specific purposes, including taxes from marijuana sales that began January 1.

The budget proposes a total increase of $570 million (4 percent) for community colleges, including a new funding formula that encourages colleges to enroll underrepresented students and rewards colleges for improving students' success in obtaining degrees and certificates.

This includes $272 billion in retirement liabilities for state and University of California employees - figures that could be understated. "This year shows that, because if we didn't start with a $1 billion reserve we would be in deficit".

In terms of marijuana, the governor's anticipating $643 million will be raised in taxes during the first year of recreational marijuana sales. As part of his spending proposal, the budget summary suggested that more information about how LCFF money is allocated and spent by school districts could be required in the next fiscal year. Republicans are looking to ask voters to overturn the tax hike but Brown said he's not concerned.

Solano County representatives were generally enthusiastic about Brown's proposal. The proposal contains $233 million for larger payments to doctors and dentists who treat Medi-Cal patients. Taking the reins as the state clawed out of the devastating Great Recession, he backed ballot initiatives that raised taxes on the wealthy and forced the state to save money and pay down debts.

Yet they noted that "the state budget process has just begun and we hope to continue conversations with the governor and the Legislature". The state's budget has grown 45 percent since 2011, when he took office facing a $25 billion deficit.

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