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California Balances Budget While Expanding Aid to Poor

Jerry Brown

Jerry Brown’s second go-round as governor has been very, very good to the Golden State.

AP (“Brown signs budget that reshapes K-12 spending“):

Gov. Jerry Brown signed a state spending plan for the coming fiscal year Thursday that makes budget-busting deficits a distant memory, funnels billions of additional dollars to K-12 schools and begins restoring social service programs that were cut during the recession.

The budget also expands Medicaid to an additional 1.4 million low-income Californians, adopting an optional provision of the federal Affordable Care Act.

“This is a momentous occasion, because we have a balanced budget not proposed but actually actualized, the first time in probably a decade or more,” the governor said moments before signing the spending plan for the fiscal year that starts Monday.

It includes a $96.3 billion general fund, the state’s main account for paying ongoing expenses. The size of the general fund and a reserve account of $1.1 billion reflect the continuing recovering of California’s economy and $6 billion in voter-approved taxes.

Declining tax revenue during the recession had cut the general fund to as low as $87 billion just two years ago, requiring lawmakers to make deep spending cuts.

The Democratic governor declared it “a big day” for public school students and those who have no health insurance or inadequate coverage.

The budget for the coming fiscal year adopts a new funding formula for public schools that will send more money to districts with disadvantaged students. It also expands Medicaid so the health care program for low-income residents could grow over the next few years to cover 9.8 million Californians, roughly a quarter of the state’s population.

Democratic lawmakers said the move will save lives, keep workers healthy and bring billions of dollars from the federal government into the state.

While still very much the social liberal that earned him the nickname Governor Moonbeam in the 1970s, Brown has matured into a pragmatic manager.* He forced through wildly unpopular austerity measures when he took over because there was no other way to deal with the budget crisis he inherited. Now, he’s won the fight to make expensive investments in the state’s future–and figured out how to pay for it.

The centerpiece of this year’s budget is Brown’s priority to reshape California’s funding formula for K-12 schools as a way to help close the achievement gap for poor and minority students.

The budget allocates $2.1 billion to begin moving the state to a new formula that gives proportionately more money to school districts with high levels of low-income students, those with limited English proficiency and foster children. School districts also will get more control over how to spend state aid.

Democrats say districts will be held accountable for how they spend the money, such as requiring them to create master plans to track the success of English learners. But Republican lawmakers have said the budget package lacks a requirement that the money be used on services and program that have proved effective.

Overall, the budget boosts K-12 and community college funding to $55.3 billion. The governor’s budget says that represents an increase of more than $8 billion over the 2011-12 fiscal year.

The budget for the coming year also gives the University of California and California State University systems an additional $125 million each, while restoring $63 million to the state court system.

Democratic lawmakers were able to restore some of the programs that were slashed during the recession for mental health treatment, health care for the poor and higher education — a move criticized by Republicans.

“Keeping promises to the people of California on education funding and paying off our state debt load so as not to burden future generations with our mistakes should have been the first priority, but unfortunately that did not happen,” Senate Minority Leader Bob Huff, R-Diamond Bar, said in a statement Thursday.

Brown made no general fund cuts in his line-item vetoes, the first time a governor has done that since 1982, when Brown did it during his previous time in the governor’s office. However, he removed nearly two dozen appropriations as a way to reduce state mandates that could saddle the state with future obligations.

He reduced $40 million in earmarks, a majority related to special education and preschool programs. Finance officials say that money will instead be used for other education purposes.

The deficit is under control and it makes sense to reinvest in California’s education system–once the model for the nation but fallen into disrepair of late–at a time when borrowing is so cheap. Indeed, Brown is in the weird position of being criticized by Republicans for not spending enough on education.  And, given that Brown has gone so far as to ignore court-ordered prisoner releases to deal with overcrowding, there’s not much choice but to spend more on prisons. (Well, there’s always decriminalization of certainly illicit drugs. I’m actually surprised Brown hasn’t moved in that direction.)

Oddly, none of this is on the front page of the LA Times. Even in the Local section, one has to scroll down a bit to get to a story titled “Gov. Jerry Brown signs budget with few changes — or complaints.”

Flanked by fellow Democrats and other political allies, Gov. Jerry Brown approved California’s new budget Thursday, changing very little of the $96.3-billion spending plan before signing it into law.

Brown said California’s finances are “in very solid shape” after years of deficits and touted increased spending on schools and healthcare for the poor.

“It is a big day for schoolkids. It’s a big day for Californians who don’t have healthcare,” Brown said. “California is the leader. The rest of the country is looking to see how we did it.”

The budget, which takes effect Monday, will change education funding, diverting some money from wealthier schools to districts with large numbers of poor students or English learners. Brown also signed bills expanding healthcare, part of President Obama’s federal overhaul.

Although the final budget hews closely to the governor’s original blueprint, it also includes new funding sought by Democratic lawmakers for welfare, university tuition assistance, mental health and dental care for poor adults.

“Today represents great progress,” said Senate leader Darrell Steinberg (D-Sacramento). “Real people hurt for so long will get some help.”

Tax revenue has continued to outpace Brown’s expectations since he reached a budget deal with lawmakers, but the governor said it would be unwise to count on the surge to continue.

“We live in uncertain times,” Brown said. “There’s a lot of unknowns out there in Washington, in Europe, in Asia, in technology, in real-estate growth.”

James Fallows has an interesting profile of “Jerry Brown’s Political Reboot” in the June issue of The Atlantic.

Brown began his first two terms as governor in 1974, at age 36, following one Republican former actor, Ronald Reagan. He returned to the office at age 72, following another, Arnold Schwarzenegger. In between he ran for president three times and the U.S. Senate once, all of course unsuccessfully; served eight years as Oakland’s mayor and four as California’s attorney general; and lived in both Japan (studying Zen meditation) and India (volunteering for Mother Teresa). He celebrated his 75th birthday the weekend I was in Oakland, which means that if he runs for reelection next year and if he wins, both of which are considered likely—his approval rating this year has been the envy of other politicians in the state—he could still be governor at age 80. “This is certainly a new identity for Brown, so flighty in his first ‘Governor Moonbeam’ period as governor,” Bruce Cain, a political scientist and an expert on California politics at Stanford’s Bill Lane Center for the American West, told me. “Now he is the most trusted, stable, and reliable leader around.” I asked Kevin Starr, of the University of Southern California and the author of the acclaimed Americans and the California Dream series of books, how Brown was seen in his return to office. “He is now liked,” Starr said. “Eccentric, but liked.”

The latter isn’t surprising. You might not like his politics but it’s hard not to like the man. He’s what people say they want their leaders to be but few are: a man who thinks for himself and says what’s on his mind, not what the pollsters tell him to say.

As a reporter, I have never encountered a politician more willing to talk with, as opposed to talk at, other people than Jerry Brown. “I think as I speak,” he told me early this year, underscoring the obvious, when I met him in Washington. He and his wife were in town for the National Governors Association conference. As I waited for them in the conference-center lobby on a Sunday morning, I saw governors from modest-size states bustle through, each with an earpiece-equipped security detail and a covey of aides. When the Browns arrived, they were alone.

“I find that a lot of people are more invested in position-taking than they are in the inquiry,” he continued. “Generally speaking, I am in the inquiry. I live in the question. People have so many positions, and usually the evidence is not strong enough for them really to be so confident in those conclusions. There are just a lot of things that are not certain.” He rattled off a list of decade-by-decade fads and gimmicks for “saving” America’s struggling school system, most recently No Child Left Behind and the “teacher accountability” movement. “The question you have to ask yourself is, if teacher accountability is really the whole key, how can it be that from Comenius”—a 17th-century European pioneer in education—”through John Dewey and Horace Mann, and going back to the Greeks, every­body missed this secret, and we figured it out just now? I’m skeptical of that—and of you, and Washington, and myself.” This was the “civilizational” outlook Nathan Gardels was referring to. Then, the practicality: “The world is so rich and diverse, and there is this technocratic imperative to impose rules, by small minds.” I realize that on the page this could look airy or pompous. In real conversation, Brown gives a convincing impression of weighing thoughts and evidence as he goes.

After a long discourse on what makes California California, Fallows gets to policy:

The easiest question to answer is how California has pulled its way out of its budgetary disaster. Three things have happened since Jerry Brown replaced Arnold Schwarzenegger: the overall economy got better, so more people paid more taxes; state spending went down, largely at Brown’s insistence; and California’s voters approved a significant tax increase, mostly on annual incomes higher than $1 million.

Each of these has its fine points. California depends more on income tax, especially from rich taxpayers (even before the new increase) than it used to. This makes its revenues notoriously volatile. They fall very fast when the state economy is contracting—Brown had 10 percent less money to work with in his first year than Schwarzenegger had had in his last—but also rise quickly when conditions improve, as they have begun to do. One other aspect of the state’s tax structure compounds its problems. The fastest-growing parts of its economy are those classified as “services,” from entertainment and health care to infotech and finance. But most of these are untaxed. In the words of a recent report on the state’s finances, “California’s tax code is so outdated that nearly $1 trillion—that is, roughly half—of the state’s economic output is not taxed.” And this despite the state’s image as being overtaxed.

The budget cuts have been substantial, and came at Brown’s insistence to an often skeptical Democratic-dominated legis­lature. This may be the place to note a difference between state and national budgets. During economic slowdowns, national governments do and should run budget deficits, to keep un­employment from getting worse. Otherwise public-sector layoffs intensify, rather than offset, what is already happening in the private economy. It is different for state governments. Many, though not California’s, have constitutions forbidding deficit spending. And not even California can view deficits as a state-level stimulus program, since so much of the spending sloshes out beyond state borders.

[...]

Brown’s current role as the Democrat who is cutting budgets brings up the inevitable “Nixon goes to China” analogy, but I think the more important comparison is to an earlier Republican president, Dwight Eisenhower. The most admirable part of Eisenhower’s policy, in retrospect, was his effort to push big infrastructure and national-greatness efforts—the interstate highway system, more money for schools and basic research, much of it of course with a Cold War rationale—while holding the line on other spending, including the Pentagon’s. I’m oversimplifying the story of the ’50s to make the point that the Jerry Brown of 2010 comes closer to that part of Ike’s balance than anyone else I’m aware of.

“For me to get the budget cuts these past two years, I had to go to the legislature and say ‘Please, please, please!’ ” he told me. “The Democrats”—who control the legislature—”didn’t like it, but they agreed as part of getting the tax increase.” In California, the governor has line-item-veto authority—one more indication of the legislature’s feebleness—and Brown says he will use his veto power to resist spending increases. “The budget is more or less balanced,” he told me. “Toun­balance things now, they have to come through me. That is a real shift in power.” Meanwhile, Brown’s reduced and balanced budget includes more spending for what he considers the big challenges of the future: clean-energy initiatives, an expensive (and controversial) north-to-south high-speed-rail project, new canals and aqueducts, even California-based medical-research projects beyond those sponsored by the National Institutes of Health.

For students of California politics, Brown’s most surprising achievement was persuading the legislature to eliminate urban “redevelopment agencies” against the bitter opposition of nearly every big-city mayor in the state, most of them Democrats. “Redevelopment agencies” were a stratagem that one San Francisco analyst has described as “the California equivalent of the national military-industrial complex.” Without getting into the details, their effect was to channel a certain share of tax money into a special fund that mayors and local officials could use to finance housing projects, malls, and similar efforts. In theory this was a step toward wholesome decentralization, but in practice the agencies were often wasteful and occasionally corrupt. “This was Brown’s really interesting move,” Joe Mathews, of the Los Angeles-based civic group Zócalo Public Square, told me. “These had turned into a racket, and he understood that and was able to unplug it.” Most state legislators had no idea why these agencies mattered, or how much money was involved. Brown, a two-term mayor, knew just what was at stake.

There’s a lot more to the Fallows piece, which is worth reading in full.

__________________

*UPDATE: After some pushback from commenters, it seems that my boyhood recollection of the young Brown as a flighty governor is mostly without basis. Aside from a handful of way-ahead-of-his-time social initiatives, the Medfly fiasco, and the incident that earned him the “Governor Moonbeam” sobriquet, Brown was actually a reasonably pragmatic and fiscally conservative administrator even in his first term as governor, which commenced when he was a mere 36-year-old.

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About James Joyner
James Joyner is the publisher of Outside the Beltway, an associate professor of security studies at the Marine Corps Command and Staff College, and a nonresident senior fellow at the Atlantic Council. He's a former Army officer and Desert Storm vet. He has a PhD in political science from The University of Alabama. Views expressed here are his own. Follow James on Twitter.

Comments

  1. anjin-san says:

    My wife was at a county mental health board meeting the other day, everyone is thrilled about the new budget. As far as mental health services go, we are backing away from the edge of the abyss.

    Like or Dislike: Thumb up 14 Thumb down 0

  2. Dan says:

    I have one question: does this mean that Jerry Brown is a better governor or has done better as governor than Arnold Schwarzenegger or is this due to a better economy? Because I was led to believe that California have a serious and chronic budget problem.

    Like or Dislike: Thumb up 9 Thumb down 1

  3. JKB says:

    Funny there is no mention of any significant application of funds to reduce the terribly underfunded state pension? I guess, a long as you ignore looming debt obligations, you can call a budget balanced and increase spending on some items.

    This is good news for Californians, as long as they don’t have kids and can move out of state when the debt overhang collapses.

    Poorly-rated. Helpful or Unhelpful: Thumb up 0 Thumb down 18

  4. Rafer Janders says:

    it turns out that getting rid of Republicans in the state government does pretty well for California….

    Highly-rated. Helpful or Unhelpful: Thumb up 27 Thumb down 0

  5. Rafer Janders says:

    While still very much the social liberal that earned him the nickname Governor Moonbeam in the 1970s, Brown has matured into a pragmatic manager.

    Objection to the framing: you write (“while still…”) as if there’s somehow a discordance between being a social liberal and a pragmatic manager. There is none. As we’ve seen in the US the past few years, the social liberals are the prudent, cautious, evidence-based party while the social conservatives are the wild, radical, irresponsible budget-busters.

    Highly-rated. Helpful or Unhelpful: Thumb up 38 Thumb down 2

  6. OzarkHillbilly says:

    @JKB:

    Funny there is no mention of any significant application of funds to reduce the terribly underfunded state pension?

    Shorter version: “It’s California! They’re Democrats! Disaster!” Which leads me to ask a question: What would a Republican do?

    Oooooooohhhh! Ooooooooohhhhh! I KNOW! I KNOW! I KNOW!

    End the pensions.

    Highly-rated. Helpful or Unhelpful: Thumb up 29 Thumb down 1

  7. Scott says:

    @Rafer Janders: It has been my contention for a while that Democrats have to really focus on the nuts and bolts of government management and leadership in order to push their policies forward. In other words, government has to work. This is a much higher standard of governing than for Republicans since, in their eyes, if government doesn’t work, it just reinforces their ideas and concepts about how government is the problem.

    I see this especially at the state and local level.

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  8. Caj says:

    Imagine that! Balancing a budget and not off the backs of the poor. Actually helping the poor at the same time. Way to go Governor Brown.

    Highly-rated. Helpful or Unhelpful: Thumb up 15 Thumb down 0

  9. rudderpedals says:

    I read this with a Floridian’s jealousy. Charlie Crist can’t win soon enough.

    Like or Dislike: Thumb up 12 Thumb down 0

  10. john personna says:

    @Dan:

    Schwarzenegger and Brown were not that far apart on the pragmatic scale.

    As a Republican though, Schwarzenegger could get neither the Republicans nor the Democrats to go along with him.

    Brown has arm-twisted, but perhaps he had a more pragmatic party to work with.

    Like or Dislike: Thumb up 1 Thumb down 0

  11. Gromitt Gunn says:

    @Dan: Jerry Brown has Democrat super-majorities in both legislative houses that allow him to ignore the Republican minority. California has incredibly difficult legislative supermajority thresholds to overcome in order to implement budgeting and taxation adjustments.

    Like or Dislike: Thumb up 8 Thumb down 0

  12. James Joyner says:

    @Rafer Janders: I was going to write “while still a liberal idealist” but that doesn’t really square with “pragmatist.” My point is that Brown’s principles haven’t changed but he’s learned in the intervening decades how to actually govern.

    @john personna: @Gromitt Gunn: This is a fair point and one I should have made in the post. Schwarzenegger, after some early foolishness, was actually a pretty shrewd politician but there’s almost no way for a Republican to govern in California. And, while Brown is by all accounts doing a solid job, he’s helped enormously by not being at the epicenter of the global financial collapse of 2008.

    Like or Dislike: Thumb up 2 Thumb down 0

  13. Moosebreath says:

    @James Joyner:

    “Schwarzenegger, after some early foolishness, was actually a pretty shrewd politician but there’s almost no way for a Republican to govern in California.”

    I think Gromit Gunn has the better of this argument. Schwarzenegger was faced with a legislature which could not pass such a budget, as the Republicans held a blocking minority. It’s only now that they don’t that anything can be done.

    Highly-rated. Helpful or Unhelpful: Thumb up 15 Thumb down 0

  14. al-Ameda says:

    @Dan:

    I have one question: does this mean that Jerry Brown is a better governor or has done better as governor than Arnold Schwarzenegger or is this due to a better economy? Because I was led to believe that California have a serious and chronic budget problem.

    It’s a combination of factors:
    (1) California changed its law to permit a budget to be passed by a majority vote in the legislature (not a super majority) thus eliminating some structural dysfunction.
    (2) the economy has generally improved since 2008.
    (3) Brown engineered a voter-approved tax increase.
    (4) Brown is a far more skilled politician and executive than Schwarzenegger.
    (5) Brown is at an age and a time in his career that he does not care if he offends Democratic interest groups, he’s free to say what he needs to say and smart enough to know what he’s dealing with. Very pragmatic.

    Like or Dislike: Thumb up 14 Thumb down 0

  15. EddieInCA says:

    Everytime a yahoo complains about “that damn liberal California” and talks about how shitty it is there for businesses, and people, I just smile, and think “Great. Stay away. We’re good thank you.”

    Like or Dislike: Thumb up 10 Thumb down 0

  16. Kari Q says:

    I’d just like to point out two things about Jerry Brown:

    1. He has always been fiscally pragmatic; it’s entirely wrong to imply that this is something he developed later in life. During his first round as governor, California had one of the largest budget surpluses in state history, over $5 billion dollars. Those of us who remember him from before knew that he would balance the budget, whatever it took.

    2. It wasn’t his social liberalism that earned him the nickname “Governor Moonbeam.” He had this nutty idea that maybe the state should have a satellite communications network. Obviously that was so outlandish that it could never happen. Hence the nickname.

    Like or Dislike: Thumb up 11 Thumb down 0

  17. Spartacus says:

    @James Joyner:

    My point is that Brown’s principles haven’t changed but he’s learned in the intervening decades how to actually govern.

    But Brown was an extremely successful governor during his first tenure. You’ve latched on to his nickname and incorrectly concluded that we wasn’t an effective governor.

    Like or Dislike: Thumb up 8 Thumb down 0

  18. al-Ameda says:

    @Kari Q:

    It wasn’t his social liberalism that earned him the nickname “Governor Moonbeam.” He had this nutty idea that maybe the state should have a satellite communications network. Obviously that was so outlandish that it could never happen. Hence the nickname.

    The late Mike Royko, who coined ‘Governor Moonbean’ said later that he regretted that.
    Brown can be faulted for a few things, but he is a pragmatist.

    He’s done a good job here by nearly any standard.

    Like or Dislike: Thumb up 11 Thumb down 0

  19. Rafer Janders says:

    After some pushback from commenters, it seems that my boyhood recollection of the young Brown as a flighty governor is mostly without basis. Aside from a handful of way-ahead-of-his-time social initiatives, the Medfly fiasco, and the incident that earned him the “Governor Moonbeam” sobriquet, Brown was actually a reasonably pragmatic and fiscally conservative administrator even in his first term as governor, which commenced when he was a mere 36-year-old.

    James, I’d remind you of Mark Twain’s classic line that “It ain’t what you don’t know that gets you in trouble, it’s what you know for sure that just ain’t so.”

    Like or Dislike: Thumb up 4 Thumb down 0

  20. anjin-san says:

    it’s hard not to like the man.

    On the occasions I met him, he struck me as something of cold fish. Maybe you just need to know him better, his cousin Hal is certainly a great guy. At any rate, he is doing good work in Sacramento.

    Like or Dislike: Thumb up 1 Thumb down 0

  21. al-Ameda says:

    @anjin-san:

    On the occasions I met him, he struck me as something of cold fish. Maybe you just need to know him better, his cousin Hal is certainly a great guy. At any rate, he is doing good work in Sacramento.

    Hal was San Anselmo guy, he was a County Supervisor for years. I think he passed away last year.

    Like or Dislike: Thumb up 1 Thumb down 0

  22. al-Ameda says:

    @James Joyner:

    Schwarzenegger, after some early foolishness, was actually a pretty shrewd politician but there’s almost no way for a Republican to govern in California.

    There is almost no way for a Republican to govern in California, primarily because of and due to Republicans.

    You do realize that Republicans were so eager to recall Gray Davis and install a Republican that they agreed that it had to be a celebrity Republican like Schwarzenegger. Once installed, Schwarzenegger turned out to be a moderate type of Republican and the Republican legislators almost completely stopped cooperating with Arnold (gee, that sounds a lot like Republican legislators in Washington, doesn’t it?)

    Like or Dislike: Thumb up 7 Thumb down 0

  23. Kari Q says:

    Brown was actually a reasonably pragmatic and fiscally conservative administrator even in his first term as governor, which commenced when he was a mere 36-year-old.

    Thank you, James. One of the things I appreciate about you is your willingness to learn and ability to gracefully admit error. The latter may be one of the most difficult things a person can learn.

    Like or Dislike: Thumb up 8 Thumb down 0

  24. anjin-san says:

    @ al-Ameda

    I had not heard that Hal passed, I am kinda out of the Marin loop these days. He was a good supervisor, very responsive. I waited on him a lot back in the day, a very pleasant, likeable guy. As far as I can tell, he was a straight shooter, not involved in the rampant cronyism and back room dealing that went on.

    Like or Dislike: Thumb up 3 Thumb down 0

  25. anjin-san says:

    there’s almost no way for a Republican to govern in California

    If you mean there is no way in hell we are going to to let batshit crazy GOP Fox/Limbaugh politics take root in our beautiful state, well that’s true.

    Like or Dislike: Thumb up 3 Thumb down 0

  26. James Joyner says:

    @Rafer Janders: @Kari Q: I was 9 when Brown first became governor and in high school when his second term ended. The strongest memory I have of him is that he once dated Linda Ronstadt. But I always had the distinct impression that he was some kinda fruit loop; no idea why. I vaguely recall his later runs for president and it seems he was always treated as sort of an odd duck.

    @anjin-san: Well, maybe “admire” is a better word than “like.” I’ve never met the man and haven’t seen him on TV much in his latest incarnation. But I like people who are genuinely curious about the world and will say what’s on their mind.

    Like or Dislike: Thumb up 1 Thumb down 1

  27. Spartacus says:

    @Kari Q:

    One of the things I appreciate about you is your willingness to learn and ability to gracefully admit error. The latter may be one of the most difficult things a person can learn.

    +1

    Like or Dislike: Thumb up 1 Thumb down 0

  28. bill says:

    ironic that illegal immigration is at a 30 year low? good for them, i hope we don’t see more doomsday stuff from cali in another 2-3 years.

    Like or Dislike: Thumb up 0 Thumb down 0

  29. wr says:

    @James Joyner: “But I always had the distinct impression that he was some kinda fruit loop; no idea why. ”

    Because that’s what the press told you? Because that’s what the Republican party told you?

    Like or Dislike: Thumb up 2 Thumb down 0

  30. wr says:

    @anjin-san: “On the occasions I met him, he struck me as something of cold fish. ”

    It’s quite possible to like someone as a public figure while having no desire to know him or her as a private individual, and vice versa.

    For example, I’m sure if I met W personally, I’d find him charming and delightful, compelling company. And I’m certain that if I met Van Morrison it would sour me on his music for years.

    So yes, I suspect that Jerry Brown is not someone I’d like to have as my friend. But unlike the entire moron press corps in 2000 — oh, and 2004, 2008 and 2012 — I can make a separation between those I want to hang out with and those I want as political leaders…

    Like or Dislike: Thumb up 2 Thumb down 0