California Governor Urges Caution With Unexpected Budget Surplus
Surplus. Billions. Increased Spending.
Words thought laughable during the end of former Gov. Arnold Schwarzenegger’s final years in office are now being freely tossed around following the release of a report by the California Legislature’s independent analyst.
Gov. Jerry Brown sought to dampen the enthusiasm on Thursday by urging caution.
“It turns out…,” Brown told reporters during a public appearance in southern California, “we have billions of dollars in surplus. So there will be a great effort to spend it as quickly as possible.”
Instead, Brown wants state reserves to be increased for inevitable rising costs.
A report issued Wednesday projects a surplus of nearly $10 billion. Spending is also expected to increase faster than projected over the next five years.
“The state’s budgetary condition is stronger than at any point in the last decade,” Legislative Analyst Mac Taylor said in his report.
An improving economy, spending restraints initiated since Brown was elected and temporary increases in taxes approved by voters last year have turned the tables, Taylor said.
Brown acknowledged social service advocates are pressuring lawmakers to restore programs cut during the recession. The economic upturn, he said, would surely heighten calls for spending during next year’s budget talks.
But Brown said overdue maintenance to roads and liabilities to pensions are problems that still need to be addressed.
California’s tax codes rely heavily on capital gains, which has proven to be volatile, especially in times of economic hardship. During the Great Recession of 2009 the state’s deficit rose to more than $35 billion.
Schwarzenegger’s final years in office were beleaguered by seemingly endless budget talks and failed effort at revenue reform. The former governor often accused lawmakers of “kicking the can down the road.”
“Down the road” has finally produced the budget surplus Schwarzenegger could only dream of, a history lesson Brown admitted Thursday gave him pause.
“I mean, I would have never thought we could go from financial instability to stability and surplus, and we can do that,” Brown said.
He said the state’s peaks and valleys have been dramatic.
“The question is, ‘When do we get to the next valley?’” Brown said. “And the only way to avoid that is to put in a rainy day fund, to say ‘no’ when necessary, along with saying ‘yes’ when that’s appropriate.”