Gov. Jerry Brown has proposed the biggest state budget in history. He wants to spend $131.7 billion from the general fund, about 5 percent more than is being spent from the $125 billion 2016-17 budget he signed last year. His 16th and final budget also includes a surplus, which some lawmakers are looking at the same way a starving man looks at cheeseburger.
“It’s a strange world where politicians are celebrating that the government took too much money from taxpayers, but that’s exactly what is happening with this budget surplus,” said Assembly Republican Leader Brian Dahle.
The celebrants aren’t in full agreement over where that surplus should be applied, though. There might be some rising tensions between those who want to put it away and those ready to spend it. But that would be the wrong argument anyway.
Brown’s proposed budget, which is actually a $190 billion spending package when bonds and special funds are included, projects a $6.1 billion surplus. Brown wants to use the surplus to boost the state’s Rainy Day Fund, which was the result of a bipartisan deal between Gov. Brown and then-Assembly Republican Leader Connie Conway and was approved by voters in 2014. His proposal would boost fund reserves to $13.5 billion.
“It’s not exciting, it’s not funding good and nice things,” Brown said of the money he wants to shovel into the Rainy Day Fund, “but it’s getting ready and that is the work of a budget.”
Those should be welcome words, since most politicians are impulsive. They prefer to spend taxpayers dollars on new, shiny — “exciting,” in Brown’s words — objects as soon as they get their hands on taxpayers’ money rather than attending to the affairs that are already under their administration. This mindset is why California’s roads have become such a rolling disaster. They have been neglected while policymakers have focused on more high-profile projects.
Such as high-speed rail. It doesn’t take a grizzled cynic to think that Brown might be putting away money for his over-budget “bullet train.” Republican Sen. John Moorlach, R-Costa Mesa, certainly believes that could happen, and his suspicions are justified. The Assembly Transportation Committee recently rejected a bill written by Assemblyman Jim Patterson, a Fresno Republican, that would prohibit lawmakers from raiding fuel taxes collected for road repair and using the dollars to make bond payments on the high-speed rail project. If they’ll move money from the state’s highway account to the train, they’ll take it from the Rainy Day Fund for the same purpose.
While Brown says he wants to bank money, some Democratic leaders are almost salivating over the prospect of spending the surplus right away.
“We have a very different approach,” said Assemblyman Phil Ting, chairman of the Assembly Budget Committee and a San Francisco Democrat. “Our focus, the people who we think need tax relief, are the working Californians who are making less than $25,000. That’s where we want to spend our money, making sure they have money to pay rent, to pay for food.”
One might think that there would be an intense demand for the surplus to instead be returned to taxpayers in the form of rebates. There isn’t. But this is where any argument about the surplus should be centered. The taxpayers were overcharged and that money belongs to them.
While lawmakers such as Ting believe the surplus belongs to them, the law says otherwise. Proposition 4, which established the “Gann limit” in 1979, not only imposes restrictions on state spending, it requires Sacramento to issue rebates when, according to the Legislative Analyst’s Office, revenues exceed the limit that Prop. 4 set “to keep inflation- and population-adjusted appropriations under the 1978-79 level.”
Though uncommon, rebates would not be unprecedented. Gov. George Deukmejian sent refunds in 1987. If none are issued for this surplus, the LAO says the state could be “highly vulnerable” to litigation because Brown is violating “the spirit of Proposition 4” by not counting “$22 billion of school-related spending toward the state’s appropriations limit” established by the law.
The threat of a lawsuit isn’t likely to move Sacramento. So if no rebates are coming, the surplus would be put to better use by dedicating it to paying down the state debt, which has reached $221 billion, according to the California Policy Center — and funding public employee pensions, which could be underfunded by $600 billion.
Sacramento, though, is programmed to spend. As usual, this won’t end well for the taxpayers.