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Brown budget proposes more spending but also fiscal restraint

PoliticsEconomy, Business and FinanceJerry BrownFinanceElectionsColleges and UniversitiesBudgets and Budgeting

SACRAMENTO — Gov. Jerry Brown persuaded Californians to elect him by promising to fix the state's financial problems, and his latest budget proposal will play a big role in his effort to stay in the job.

His $155-billion blueprint, unveiled Thursday, lays the groundwork not only for spending negotiations with lawmakers but also for an expected reelection campaign that could earn Brown an unprecedented fourth term as governor.

Holding news conferences in three cities — Sacramento, San Diego and Los Angeles — Brown focused on the need for continuing fiscal restraint despite the state's economic recovery.

"By no means are we out of the wilderness," Brown told reporters in the Capitol, emphasizing the need to pay down debt and save money as a hedge against future financial turmoil. "We must be very prudent in the way we spend public funds."

It's the same message Brown has been pushing since his 2010 campaign: that he is a trustworthy steward of taxpayers' money. Tight-fistedness has long been part of Brown's public persona; he eschews state limousines and private jets in favor of more modest cars and commercial flights.

Although his proposed budget would raise general-fund spending by more than 8%, to $106.8 billion, he continued to portray himself Thursday as a necessary check on fellow Democrats eager to spend. For example, Brown declined to commit money for universal preschool, one of lawmakers' top priorities.

"A lot of programs are very attractive and may have very positive value," Brown said, but "it isn't time to embark on a whole raft of new initiatives." California still faces significant debt and other growing financial obligations, such as public pensions.

Election-year budgets can be a key campaign tool. In 2006, Gov. Arnold Schwarzenegger launched plans to borrow $68 billion for new public-works projects, dovetailing with his reelection year message that he was the man to rebuild California.

That year's budget also boosted money for schools — a priority for most voters, opinion polls consistently show — and prevented a scheduled 8% tuition hike at the state's public universities.

"To not consider reelection while preparing your budget would be malpractice," said former Schwarzenegger aide Matt David.

Brown's political spokesman, Dan Newman, said the governor's proposal was not political posturing. While Schwarzenegger used his election-year budget to change his image, Newman said, Brown's spending plan simply reflects his core values.

"Jerry is who he is," Newman said, "the cheapskate who also thinks big."

Brown the penny-pincher is proposing a ballot measure that would divert some revenue to a rainy-day reserve. If passed by lawmakers, it could serve his claims to prudency.

But Brown the visionary has already run into trouble. One of his big ideas, a $68-billion state bullet train network, has grown increasingly unpopular as it has faced a series of legal setbacks.

Brown wants to spend $250 million from fees on polluters to help keep it rolling, and that has drawn fire from environmentalists who want the funds used elsewhere, and from conservatives who oppose both the train and the carbon-trading market that generates the money.

Republican candidates for governor also took aim at Brown's support for high-speed rail, calling it a boondoggle and evidence of his financial mismanagement.

Former Lt. Gov. Abel Maldonado, who is expected to run this year, said in a statement: "Jerry Brown's policies are just not working for the people of our state."

Assemblyman Tim Donnelly (R-Twin Peaks) said in a statement that Brown was failing to tackle some of the state's deep-rooted financial problems. Donnelly accused the governor of viewing the budget through "rose-colored lenses."

Brown declined to discuss any reelection campaign Thursday, but he had more than $10 million in a campaign account as of June 30, and he has raised an additional $6.9 million since then. Donnelly raised $92,000 in the last six months, and Maldonado has collected $149,000. Former U.S. Treasury official Neel Kashkari, who is also weighing a bid for governor, has not reported raising money for the race.

Taxes

In his budget proposal, Brown rejected any new taxes for the second straight year despite a push by some Democrats for a new levy on oil extraction.

"I don't think this is the year for new taxes," Brown said. "I just think we want to do everything we can to live within our means."

Brown wants voters to approve a constitutional amendment in November that would divert higher-than-normal capital gains tax revenue into a rainy-day fund that could be tapped in leaner years. Brown said capital gains taxes are volatile and have driven the roller coaster of state finances over the last two decades.

Two years after eliminating state redevelopment agencies, Brown wants to make it easier for local governments to raise money for development projects. He would allow cities and counties to sell bonds or raise taxes for such projects with approval from 55% of local voters rather than the two-thirds required in most cases.

Education

Brown would devote $61.6 billion to elementary and secondary schools, an increase of $6.3 billion. Compared with three years ago, that would be more than $2,188 per student in new spending. An additional $3.4 billion would go to the schools to make up for unpaid obligations in previous years and to the community college system.

"We're putting $10 billion [more] into the schools of California after years of drought and cutbacks and pink slips for teachers,'' Brown said.

The governor proposes adding slightly more than $1 billion for higher education, for a total of $26.3 billion. That includes an additional $142.2 million each from the general fund for the University of California and Cal State systems.

His budget would help college students, he said, "by holding tuition flat and by encouraging the universities and colleges to enable students to get through in four years instead of the much longer period that seems to increasingly be the order of the day."

Healthcare

The bulk of Brown's health spending would go to Medi-Cal, the state's public program for the poor, which is growing significantly under the new federal healthcare law.

Medi-Cal is the second largest program in the budget. It is expected to serve a quarter of California's population and cost $16.9 billion from the general fund next year.

That includes $670 million in new spending to pay for expanded mental health and substance-abuse treatment, nutrition programs and dental services previously approved by the Legislature.

Brown would restore some money cut from Medi-Cal reimbursements in the recent past but maintain those rate cuts in the future. Healthcare providers want higher rates restored.

The budget proposal also includes $17.5 million to publicize children's dental services available through Medi-Cal. The state will consider boosting its outreach program for children's vision care as well.

Social services

Brown's plan would keep in place a 5% increase set in last year's budget for CalWorks, the state's main welfare program. The administration estimates that next year CalWorks will serve about 529,000 families a month, a slight decrease from this year's caseload.

The proposal would also boost funding for In-Home Supportive Services to $2 billion — an increase of 6%. The program provides domestic services for low-income seniors and disabled people, so they can stay in their own homes rather than move to nursing homes or other institutions.

About 453,000 people each month are expected to receive those services in the next fiscal year, which starts July 1.

Brown also calls for a pilot project to provide child care, job training and parenting instruction for 2,000 families in six counties for three years. It would cost $9.9 million to launch the project in the spring of 2015, and the cost over three years would be $115.4 million.

Prisons

More than 2,200 criminals would be eligible for release from prison under Brown's settlement offer to federal judges who want inmate numbers reduced.

Elderly prisoners and more of those who are seriously ill or severely mentally impaired could be paroled. The governor also proposes that some repeat offenders be able to earn more time off their sentences for good behavior.

Estimates the state gave judges in May showed that the number of prisoners initially freed would be much smaller — just over 400 in the program's first six months.

Tough-on-crime groups are disheartened. "He is going the other way," said Michael Rushford, president of the Criminal Justice Legal Foundation.

Advocates for prisoners said the potential releases are welcome. Still, they would be "too little, too late," said Don Specter, lead attorney for the Prison Law Office.

Brown concedes that California will miss the courts' April deadline to reduce crowding to specific levels. If he does not win a delay, he seeks to spend $315 million to move prisoners to privately owned lockups. If a delay is granted, he proposes $81 million for community rehabilitation programs.

Brown also proposes $500 million to build more jails, on top of $1.7 billion the state has approved over the last six years.

Environment

Brown's plan anticipates that $850 million will be generated from fees on polluters, under the state's "cap-and-trade" system. Perhaps the most controversial item in Brown's blueprint is his proposal to spend $250 million of that money to help fund the first leg of a favorite project: the state bullet train.

The governor wants an additional $50 million of the fees to pay for updating existing rail systems. Another $200 million would provide rebates for Californians who buy cleaner cars and incentives for businesses and local governments to start using hybrid and zero-emission trucks and buses.

The remaining money would fund energy-efficiency projects, wetlands restoration and fire prevention activities.

The governor also would dedicate $1.5 million to protect the state's waterways from pot growers. "Marijuana cultivation is threatening water supply, water quality and the sensitive habitat of endangered species," Brown's document says.

The plan includes $40 million as well for the maintenance of state parks, which has been deferred for several years.

chris.megerian@latimes.com

anthony.york@latimes.com

Times staff writers Melanie Mason, Patrick McGreevy, Seema Mehta, Tony Perry and Paige St. John contributed to this report.


Copyright © 2014, Los Angeles Times
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PoliticsEconomy, Business and FinanceJerry BrownFinanceElectionsColleges and UniversitiesBudgets and Budgeting
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