Capitol Journal: With prudent budget crafting, Brown shows again that he’s the adult in the Capitol
The “Good Brown” was on vivid display Tuesday — the prudent, sage governor respected by Californians of wide-ranging political beliefs.
This was the popular, dominant side of Gov. Jerry Brown’s emerging legacy — the adult in the state Capitol, the political tutor, the check on runaway spending.
For the record:
9:22 a.m. Sept. 28, 2022An earlier version of this article said Joe Nation was a former Republican state assemblyman. He was a Democratic state assemblyman.
It’s why he was elected to third and fourth terms — a record that can never be broken under current term limits — and why he retains high job approval ratings in every poll.
Budget crafting is when Brown earns his kudos, even if grudgingly.
The “Bad Brown” for some of the same admirers is the old “Moonbeam” — I hate that tag, but for many gray-hairs it still sticks — who can be stubborn and reckless.
The biggest current example: Brown’s obsession with building a controversial, $64-billion bullet train from Los Angeles to San Francisco with not nearly enough money in sight to complete the project.
And for many Northern Californians, environmentalists and fiscal skeptics, it’s also digging two monstrous tunnels under the Sacramento-San Joaquin River Delta to siphon fresh water from local communities, farmers, salmon and other critters for more powerful farms and cities to the south. Cost to water users: $15.5 billion.
Here’s an example of these mixed feelings: “I agree with the governor’s budget approach that ensures we are prepared for the expected economic downturn,” said Senate Budget Committee Vice Chairman Jim Nielsen (R-Tehama).
“This budget, however, continues to ignore our long-term infrastructure priorities like more water storage and repairing our dilapidated roadways. The time has come to abandon ill-conceived, costly ideas like high-speed rail and twin tunnels.”
It isn’t entirely true that Brown’s new $179.5-billion budget proposal ignores infrastructure.
The state is moving toward helping to finance probable construction of a major reservoir called Sites in the Sacramento Valley.
Dig deep into the budget and you’ll see he intends to sell $447.5 million in bonds to upgrade water facilities and promote recycling.
And the budget contains essentially the same fuel tax increase Brown previously suggested — and the Legislature shelved — to repair crumbling highways.
There wasn’t a lot of talk during the budget unveiling about one long-term, heavy financial burden facing the state: an almost overwhelming millstone of unfunded retiree benefits due public employees. The deficit figures make any crowing of balanced annual budgets sound practically disingenuous.
There aren’t real solid estimates. Calculations depend on guessing what the pension funds will earn on their investments. In the past, pension boards have padded the earnings projections to justify paying retirees more.
So California’s total unfunded retiree liabilities — state and local — are estimated wildly from $230 billion to $1 trillion. The real figure is probably somewhere in between.
Since governments and employees usually share in those retiree costs, it means bigger slices of future budgets will probably have to be funneled into pension systems. Less will be available for programs like education, transportation and healthcare.
“California and other states have promised far more to retired employees than they can deliver,” says Joe Nation, a former Democratic state assemblyman who is a Stanford public policy professor and heads a public pension research project.
“What we need are honest numbers, to pare back future pensions and pour more money into it. Everyone has to take a haircut. Everyone in this game understands that it’s a racket.”
Brown has taken a stab at pension reform and at one point did push some modest changes through the Legislature.
“We’ve done more than most other states,” Brown told reporters Tuesday. “There are cases going on through the courts that are redoing the pension rules. So this will be a lively topic.”
Brown talked more about an immediate state problem: a volatile, outdated tax system that can easily produce a boom or a bust in state revenue. But he again only called for treating the symptom by socking more money away. He stayed clear of attempting to fix the core problem by enacting a wider-based tax system.
State revenue is too dependent on taxing rich people. The top 1% pays nearly half of the state’s personal income tax. Problem with that is their capital gains fluctuate like a yo-yo during up-and-down times and the state revenue flow resembles a rollercoaster.
California voters just made it worse by extending Brown’s 2012 soak-the-rich tax increase for 12 years. What’s actually needed is to broaden the tax base. But that means increasing some taxes while lowering others. Politicians have no stomach for that. Brown certainly won’t lead.
“I’m perfectly willing to work with” reformers, Brown said, but until they can pass something, “we must maintain a big reserve.”
That wouldn’t even be a small Band-Aid during a recession.
“California has the most progressive tax system in the United States,” Brown said. “But as a corollary, we have one of the most unreliable revenue systems in the country….
“This is the very time when you have to pull in and provide a budget reserve.… To spend and then cut, and then have all those problems [like those] under Gray Davis and under Arnold Schwarzenegger, I don’t want to repeat that.”
Not to mention the uncertainty of President-elect Donald Trump’s federal funding ax that could cost California tens of billions.
Brown is a historic figure winding down a remarkable political career. Trump is embarking on an unprecedented, unorthodox presidency. Their counter play will be fun to watch — maybe also scary.
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