SACRAMENTO, Calif. _ Even after previous tax windfalls, Gov. Jerry Brown's announcement Friday was breathtaking: California has collected an unexpected $9 billion in tax revenue in recent months, $3 billion more than projected in January.
The money is the latest installment in a fiscal winning streak of historic proportions in California. And, as in previous years, the governor's newly revised budget seeks to use it either on short-term spending or long-term savings by putting it into government reserves.
"This is a time to save for our future, not to make pricey promises we can't keep," Brown said. "I've said it before and I'll say it again: let's not blow it now."
Brown's most significant proposal for spending the money may be a $359 million increase to ease the state's growing homelessness crisis. His proposal also backs a plan to put a $2 billion bond for homeless housing on November's statewide ballot. The budget also would add $312 million for mental health programs.
The infusion of cash to help the homeless is one of only a few new proposals in the $199.2-billion budget, a revision of Brown's original proposal to the Legislature in January. As was the case then, the governor continues to believe that most of the tax windfall should be socked away in the state's rainy-day fund.
"I'll be very cautious in this year's budget," he said Friday.
Brown's plan calls for topping off the reserve account to $13.8 billion by next summer. Under a 2014 ballot measure approved by voters, the fund can grow to no more than 10 percent of projected general fund revenue. That law also requires some of the early money be spent on repaying government debt.
Some of the extra money would go toward a $1 billion effort to reduce the backlog of delayed maintenance in state departments and agencies. Almost one-third of the money would pay for projects on community college campuses, state prisons and deteriorating river levees. In addition, the University of California and California State University systems would each receive $100 million for maintenance.
Brown also warned UC and CSU leaders in his budget that should either raise tuition in the coming school year, he would seek a cap on state scholarship funds. That support, money for the Cal Grant and Middle-Class Scholarship programs, would otherwise rise automatically to meet student financial needs. Both university systems delayed action on tuition increases in recent weeks before seeing the final state budget.
As in previous years, a key debate point over the next few weeks is likely to be how to categorize much of the unexpected money. Brown has consistently argued that the windfalls should be considered temporary and thus not used to pay for ongoing state services. Legislative Democrats have largely agreed to those demands, narrowing the number of social services programs that can be boosted.
Those agreements have left some programs at or near the levels during the 2007-09 recession. The governor insists that his administration has made significant strides toward helping Californians who live in poverty, including creating a tax credit for the working poor in 2015 and gradually increasing the state's minimum wage.
And yet lawmakers, in budget committee hearings through the winter and spring, heard from scores of advocates who pleaded for additional money to boost subsidized child care and cash grants for the aged and disabled. Democrats in the Senate and Assembly are expected to insist on more long-term funding for CalWORKS, the state's welfare assistance program, as they begin negotiations with Brown over the next few weeks.
The governor acknowledged "there will be some back and forth" in those private negotiations, though he insisted that there's no way to match dollars with demands. "If you take all these needs, and there are a lot of them, it's endless," he said.
The new focus on homelessness is intended to help cities and counties that are struggling to address the steady stream of adults and families living on the streets. A federal study concludes that more than 130,000 residents of the state are homeless, a 14 percent increase in the last year alone.
Brown is now supporting a bill by Democratic state Sen. Kevin de Leon to have voters sign off on the housing bond instead of waiting for a court decision. A two-thirds majority of lawmakers will have to agree for the bond measure to appear on the ballot.
The slow pace of spending on aid for the homeless is one reason for calls this year from Los Angeles Mayor Eric Garcetti and mayors of the state's 10 other largest cities to spend $1.5 billion from the budget surplus to help local governments address the problem. State senators also have proposed a plan to spend $2 billion of the surplus on low-income housing development, with half that amount earmarked for homelessness programs.
Of the $359 million for homelessness efforts in the governor's proposal, the state would provide $250 million in grants to cities and counties that have declared homelessness emergencies. The remaining amount is for spending increases to existing state health, emergency and social service programs designed to help homeless domestic violence victims, the mentally ill and poor senior citizens.
Garcetti and the other mayors praised the governor for his proposal but indicated they would be seeking more money.
"I look forward to working with the governor, the Legislature and mayors across California to make certain that there are enough dollars to make meaningful and lasting strides toward ending the moral and humanitarian crisis on our streets," Garcetti said in a statement.
In acknowledgment of last year's deadly wildfires up and down the state, Brown would also add nearly $100 million to the budget for fire prevention. The state would increase controlled burns and boost education and training programs in fire-prone areas. California environmental officials said Thursday that the money is needed because the state's forests are facing "a catastrophic shift" toward increased risk of major disasters.
"Science tells us that these trends will only be exacerbated by climate change," said John Laird, the state's secretary for natural resources.
California's primary and secondary schools and community colleges would continue to receive the largest share under the budget, with a $2.8 billion increase from earlier projections. Spending is estimated to be close to $4,600 more per student than seven years ago.
While experts have pointed out that the state and the nation are overdue for an economic course correction that would slow the rate of tax collections, California's fiscal watchers see multiple reasons for three consecutive years of better-than-expected receipts. There's also the temporary surcharge on high-income earners that California voters approved in 2012 and extended in 2016.
Stock market strength has again produced sizable capital gains for the state's most wealthy, one of the primary drivers of income tax revenue. Brown said Friday that as few as 15,000 tax filers in the state provide one-quarter of the income taxes collected. When the fortunes of those Californians suffer, so does the state budget.
"Life is very giddy at the peak," Brown said. "But I'm not giddy."
