5 key things worth watching in Brown's revised budget

1:13 PM, May 13, 2013   |    comments
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Gov. Jerry Brown unveils his revised state budget on Tuesday, a late spring rite of passage in Sacramento.  More than anything, it kicks off the real debate over California's spending priorities.

This year, that fight may be a bit more subdued but no less interesting to political watchers.  And so, five things to watch both as Brown makes his proposal... and in the immediate few weeks to come.

1. The Money Mystery: This one will likely dominate Tuesday's news coverage, and deservedly so. Professional and amateur budget watchers alike expect the governor will proclaim a state treasury as much as $5 billion larger than was assumed just four months ago.  So is it actually "surplus" cash, or just an unexpected speedy payment of taxes owed?

The likely answer is the latter, an accelerated payment of already expected revenues.  Many of the taxpayers that matter in California's budget balancing, those in the top 1 percent of all personal income filers, are believed to have paid their tax bill early in many cases to avoid the federal tax hikes that kicked in on January 1. As such, the bulk of the state's revenue windfall also came in January.

And even then, the nonpartisan Legislative Analyst's Office points out that some of the money may even have to be counted in the fiscal year that ended on June 30, 2012 -- almost a year ago.

All of this means Brown may very well demand to keep the budget champagne on ice, telling legislators that the vast majority of the cash isn't "extra" money.

2. Schools Win, But Will Anyone Cheer? As state political watchers well know, California's budget is stacked in favor of K-12 schools and community colleges.  The voter-approved Proposition 98 school funding guarantee mandates roughly 40 percent of general fund revenues for K-14 education.  And so any boost in tax revenues generally means a boost for schools.

But Prop 98, whose formulas for calculating the school mandate have always been a bit of a 'black box' that magically spits out a result, has become so politically stretched and pulled in recent years that some critics now call it almost meaningless.

Meaningless, that is, until lawmakers actually pass a budget.  And under existing budget law, the surprise tax revenues would probably go directly to unpaid debt to schools, called the "maintenance factor" in Prop 98 lingo.

But it's possible school officials may not have so much to cheer about.  As the Legislative Analyst's Office has pointed out, a decision by Brown and legislators to count the unexpected cash as a one-time phenomenon could mean the Prop 98 mandate actually would go down year over year.  Yes, all of this creates a brain freeze comparable to an overzealous drag on a Slurpee.

And even then, there are some Capitol watchers who believe the existing Prop 98 interpretations could not only swallow all of the unexpected tax revenue, but even additional dollars...which would mean less money for other state services.  Yes, this is all pretty complicated stuff, but you can bet it's going to be a big topic of discussion this week.

3. Restore Those Cuts! All of the above minutiae of the California state budget will probably not stop a passionate debate about revering some of the cuts made in recent years to social services, the so-called 'safety net' programs that provide help to the poor, elderly, and disabled.  The question, of course, is whether there's the money to do so... and what gets cut for every program that gets boosted?

There's been even some bipartisan talk in recent weeks about things like dental coverage for Medi-Cal recipients.  But absent a political deal that more liberally scores higher tax revenues as far reaching and recurring, the 'restore vs. hold the line' debate is going to mainly be one fought between legislative Democrats and Gov. Brown.

4. Brown's Policy Squeeze: Don't expect a lot on this one come Tuesday, but one of the more intriguing political dramas that will begin with the May budget revision involves the governor's push on keeping big policy changes inside the state budget, and not in stand alone legislation.  Tops on this list: Brown's quest to permanently send more money to school districts with large numbers of poor or English learner students.

Why is it a big deal to make this part of the budget? Because it allows the governor to push Democrats (many of whom are outright opposed to his plan) to act now, not later.  A separate policy bill could be debated/amended/delayed until late summer... or even to 2014.

But making the school funding fight part of the budget... means legislators who don't act by June 15 don't get paid.  That's a deadline that probably won't get ignored.

5. Gubernatorial Concessions? Finally, keep an eye on what kinds of recent issues and debates the governor folds into his revised state budget plan.

Any of the new ideas floated on how to spend the Proposition 39 corporate tax increase? His interest in revamping a 27-year old consumer notification law, also being pushed by the Legislature? A legislative push to block a retroactive tax fight that has infuriated the business community?

These ideas, and more, reflect not only big budget or state economic debates; they also offer both legislators and the governor some more poker chips for their final, private negotiations on a state spending plan to be enacted by the end of June.


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