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4 political hurdles for Jerry Brown's new budget

6:08 PM, Jan 9, 2014   |    comments
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Gov. Jerry Brown may have not expected to finish up his state budget discussions so early this week -- Wednesday's leak of the documents sped things up -- but he's no doubt glad to have it in the hands of the Legislature.

And yet, some of his toughest work lies ahead.  The $154.9 billion dollar plan attempts to thread the political needle between those who wanted more spending and more restraint.

READ MORE: Gov. Brown's leaked budget balances spending, saving

Here are four of the governor's biggest budget hurdles on the horizon before he signs a spending plan into law this summer.

1. Rainy Day Rumble Redux:  The news that Brown is planning to allow $1.6 billion in the state's tax windfall to flow into the existing reserve fund -- a transfer that has been suspended every year since 2007 -- will be quickly eclipsed by the fight over reworking the structure of that reserve fund.  And it's got all the markings of a bruising political fight.  Legislators, especially Democrats, seem eager to engage on this issue... mainly because there's a budget reserve plan for voters to consider that's already on the Nov. 4 ballot, and a lot of Dems don't like it.

Assembly Constitutional Amendment 4 is a remnant of the tense 2010 negotiations during the depths of the state's economic free-fall.  It's also a 'rainy day reserve' proposal that former Gov. Arnold Schwarzenegger and GOP legislators pushed hard to craft; that was back before the lowering of the legislative vote to pass a state budget... and this was the Republican price for their votes.  ACA 4 would limit the ability to suspend cash transfers into the fund (which, again, has been happening annually since 2007).  It also would use a 20-year calculations of state revenue trends to determine what's surplus cash and what isn't.

Assembly Speaker John Pérez, D-Los Angeles, has been promoting an alternative plan.  The governor's new budget sketches out a plan that seems similar.  But Brown also suggests a new way of limiting the volatility in revenues to fund schools... and some in the education lobbying world are already sounding the alarm. Keep in mind, too, that crafting a new constitutional amendment for the ballot still requires a supermajority vote in both houses of the Legislature, and not all Democrats may see eye-to-eye on the issue.  Republicans, no doubt, realize the existing ACA 4 is much more restrictive than anything else they'll get.  And everyone, including Brown, knows that powerful political forces have killed ballot measures in the past that restricted future spending.

This fight could be a biggie.

2. High stakes over high speed rail: Brown seems to have doubled down on high speed rail in this new budget plan, by squeezing some of traditional allies into accepting a plan to use $250 million of cap and trade auction proceeds for the bullet train project.  The train project hit some rough patches in 2013, none rougher than a judge blocking bond financing for the near future. The governor said Thursday that the train is perfect for greenhouse gas dollars, given riders on it would ostensibly be driving less.

But even some Democrats in the Legislature would prefer to use that big chunk of cap and trade cash on more immediate greenhouse gas fighting projects.  And the governor, assuming he runs for an unprecedented fourth and final term this year, may find an electorate that's had a change of heart about the bullet train.

I asked Brown about the train project during Thursday's budget press conference, and he invoked other big infrastructure quests through history -- from the Golden Gate Bridge to the transcontinental railroad.  The trouble with that comparison: those projects were to fill a need that was deemed urgent and a necessity.  While some high-speed rail supporters are fervent about the need, others (notably, some legislative Democrats) have suggested it's not mission critical.  That kind of nuance remains a real problem for the governor's sales pitch.

3. April Showers: While the Legislature will start digesting the governor's many budget ideas over the coming weeks, the fiscal debate in Sacramento never really ignites until after April 15 -- the only time that lawmakers get a clear sense of whether their tax revenue predictions are coming true.  Certainly, a decline in revenues would force Brown and legislators to rethink their plans. But suppose things get even better?  Less than an hour before the governor released his budget, the state controller reported another round of better-than-expected tax collections from the month of December.  More money could mean more political headaches, with Democrats and others insisting the generally frugal Brown endorse more spending.  Of course, that would also force him to reverse course on his public insistence on Thursday that "prudence is the order of the day."

4. Picking Their Battles: Democrats and the governor both will need some time to assess not just the fine points of this spending plan, but how it's received both in the press and in the world of powerful Capitol interest groups.  And the political forces are going to have decide which fights to fight, and which ones to let go. Democrats have already signaled the importance of transitional kindergarten, a program Brown curtailed in 2011 and one his budget doesn't include.  The governor, meantime, also must decide how to deal with demand for a new water bond measure on the 2014 ballot.  Labor unions and liberal activists may have to decide which programs they really think Brown is under-funding; business groups may have to weigh the pros and cons of the budget's impact on their bottom line.

Picking your battles is something familiar in Capitol debates, as it is in life.  But with an election year looming, and a sense that many of these boom-time dollars won't last forever, the politics over clashing versus compromise could be more noticeable than it has in a while.


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