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Brown’s Budget Cuts California Spending Plan Despite Surge In Tax Revenue

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SACRAMENTO (CBS/AP) – Despite surging state tax revenue, Gov. Jerry Brown on Tuesday announced a spending plan for the coming fiscal year that is $1.2 billion lower than he projected in January.

Actions by the federal government are at least partly responsible.

The forecast for growth of personal income is lower because the federal government did not extend a 2 percent payroll tax reduction. That reduced the projections for personal income growth for the coming year in half, to 2.2 percent.

The governor’s budget document says the federal government spending cuts—the so-called sequester—also helped erode the budget projections for the fiscal year that starts July 1.

Brown said the proposed budget he released in January did not anticipate the lower growth forecast or the depth of the federal government cutbacks, which he said are affecting the state’s overall economy just as it was gaining strength after years of recession.

His general fund budget of $96.4 billion still invests heavily in education, thanks to a big haul of state tax revenue.

Voters approved Brown’s Proposition 30 last fall to increase the state’s sales and income taxes, and personal income tax receipts have been running $4.5 billion ahead of projections. The state’s education funding formula will send most of the extra money to public schools.

K-12 spending is projected to rise from $47.3 billion in the 2011-12 fiscal year, Brown’s first budget since reclaiming the governor’s office, to $66.5 billion in the 2016-17 fiscal year. His budget provides $1,046 more per student in the coming fiscal year.

The governor also is setting aside $1.9 billion to modify the state’s K-12 funding formula by giving proportionately more money to schools with high numbers of lower-income students, English-learners and foster children. Brown’s plan has been criticized even by lawmakers in his own party because some of the school districts they represent are wealthier and would not see as much extra money.

Yet the governor has said that spending more on disadvantaged children is the right thing to do.

“Everybody’s going to do better, but some are going to do considerably better,” he said.

He also proposed an additional $1 billion to help public schools implement more rigorous academic standards.

Brown is maintaining a $1.1 billion reserve fund for unanticipated expenses and warned that future federal government actions, economic uncertainty and soaring costs to operate state prisons because of a federal court takeover underscore a need for fiscal discipline.

“We have climbed out of a hole with the Proposition 30 tax, but this is not the time to break out the champagne,” Brown said. “It’s a call for prudence, not exuberance.”

(Copyright 2013 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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