Back in May 2016, Governor Jerry Brown urged lawmakers to refrain from any massive new spending programs, due to the possibility of an economic slowdown or recession.
“Right now, the surging tide of revenue is beginning to turn,” Governor Jerry Brown said, at a press conference where he announced a revised $122.2 billion state budget and potential deficits ahead due to expiring tax increases.
Perhaps the governor’s admonitions for less spending were prophetic, given President Trump Administration’s executive order to cut off funding to sanctuary cities. State democrats have decried the idea and some media outlets report that lawmakers may be considering withholding state tax revenues from Washington DC if federal monies are withheld from The Golden State.
On top of the usual state expenses, the governor’s bond accountability web-page has posted an alarming need for $500 billion to be spent on California’s deteriorating infrastructure:
California faces over $500 billion in infrastructure needs to meet the demands of a population expected to increase by 23 percent over the next two decades.
In November 2006, the voters approved the first installment of that 20-year vision to rebuild California by authorizing a series of general obligation bonds totaling $42.7 billion, however, the same bond accountability website also points out that “if California is to maintain its highly valued quality of life and continue its economic growth” that the consequences will be the governor proposing an additional $42.3 billion of bonds to fund infrastructure improvements over the next decade.
In spite of this apparently ‘immediate’ need for infrastructure spending–and Governor Brown’s May warnings for fiscal conservancy–several 2017 legislative bills, from both Assembly & Senate appear to call for even more spending while simultaneously thumbing their nose at the federal government. SB562, for example, which would revamp the state’s health care, would add billions to the state’s budget annually by more than doubling the current Medi-Cal caseload, even more if Trump withhold federal funds, which pay a little over half of MediCal’s current annual cost.
Another costly plan, unveiled earlier this month by state Democrats, is to make tuition & living costs free for state college students.
“California is taking the boldest step in the nation for making college debt-free,” Assembly Speaker Anthony Rendon, D-Paramount, said in a recent press conference.
The cost for the ‘free college’ program would come at a price tag of $1.6 billion per year, phased in over five years and would be paid for using money from the state’s General Fund, lawmakers say. Proponents say existing tax revenues will cover the cost, but other projections to provide universal college came in at a much higher cost of $3.3 billion annually.
Question: Can California afford to pick a fight with Uncle Sam?
The current state budget includes nearly $96 billion in federal funds for 2016-17, the fiscal year that began last July 1. This is more than one-third (36 percent) of the total state budget, which also includes more than $170 billion in state funds for the current fiscal year. – Fact Sheet, December 2016 · By Scott Graves
Just under one third of federal funds allocated to California, or $102 billion, go to retirement benefits, including Social Security payments and veterans benefits. Less than one third, or $99 billion, was spent on non-retirement benefits, like Medicare, food assistance, and unemployment insurance.
2nd Question: if federal funds are indeed withheld from California, then who will cover the shortfall for our current spending, let alone all the new spending pending in the legislature?
Article by L. R. Styles. Photographer: Steven Styles/ Belator Media