California Gov. Jerry Brown is scheduled Thursday to release his revised state budget amid lower-than-expected revenue and uncertainty about future federal spending on health care.
The release of Brown's spending plan for the next fiscal year kicks off a month of negotiations with the Democrat-controlled Legislature.
Brown in January proposed a $122.5 billion budget that kept general fund spending mostly flat. The Democratic governor called for more than $3 billion in cuts because of a projected deficit he pegged at $1.6 billion. His administration later acknowledged it miscalculated health care costs. The governor is expected to release an updated deficit projection at the Capitol news conference.
Trying to close the perceived gap, the governor in January proposed eliminating billions of dollars allocated to education, state building construction, subsidized housing, college scholarships and child care providers. He also sought to boost the state's reserve fund to $7.9 billion — up from $6.7 billion in the current budget year — to help soften what he warned is an inevitable recession after 10 years of economic recovery.
Mac Taylor, the nonpartisan legislative analyst, said in January that the governor's deficit projection was probably overly conservative.
Democratic legislative leaders gave that budget a tepid response, rejecting Brown's proposed cuts to college scholarships and child care providers while insisting they will push to increase spending on social welfare programs.
By law, about half the state's spending goes to K-12 education and higher education.
Brown also sparked controversy by proposing to use much of the money from a tobacco tax increase approved last year by voters to cover normal growth in Medi-Cal, a publicly funded health plan that covers 1 in 3 Californians. The initiative had been promoted by doctors, dentists and others who thought the money would be used to increase their payments, which are significantly lower than private insurance.
The budget negotiations come as the U.S. Congress considers repealing former President Barack Obama's health care law, which California embraced to add nearly 4 million people to Medi-Cal. Administration officials say under a bill passed by the House last week federal funding for Medi-Cal would fall by $6 billion in 2020 and by $24 billion by 2027.
Tax collections have slowed since the governor's previous spending plan. Revenue in April — the most important month for tax collections because of the deadline for filing personal income taxes — fell far short of expectations. As a result, revenue for the first 10 months of this fiscal year fell short by $136 million.
The Legislature has until June 15 to approve a budget for the fiscal year starting July 1. If they're late, they lose their pay every day until a budget is passed. This will be the first year of budget negotiations since voters approved a ballot initiative requiring legislation to be in print for 72 hours before it's approved by the Legislature, a factor that could complicate negotiations that often go down to the wire.
Lawmakers have made a wide variety of requests that will be part of the negotiations.
Four senators from Northern California want $100 million for levee repairs at the Oroville Dam, where nearly 200,000 people who live downstream had to be evacuated after heavy rains exposed weaknesses earlier this year. The levees must be repaired this year, the bipartisan group of senators wrote in a letter, adding that the investment would "save lives, protect property, and save the state billions in avoided emergency repairs."
Lawmakers from the Bay Area asked for $10 million in response to flooding earlier this year in San Jose.