California first to turn the corner?
SACRAMENTO (Reuters) - California's budget deficit is gone after years of financial troubles, Governor Jerry Brown said on Thursday, proposing a plan that raises spending on education and healthcare, boosting total expenditures by 5 percent.
Brown vowed to push back at legislators eager to raise spending quickly, restoring the billions of dollars to social services and other state functions that were cut in lean years.
"I am determined to avoid the fiscal mess that the last few governors had to deal with," Brown told reporters as he introduced the budget for the 2013-14 fiscal year beginning in July.
The state expects $98.5 billion in revenues and transfers and plans spending $97.7 billion, according to the proposal published on the state Department of Finance website.
That leaves a surplus of $851 million for the year, in addition to a projected $785 million surplus for the current fiscal year, which ends in June, allowing the state to put $1 billion toward a rainy day fund.
Now I guess we'll learn whether and how the Governor will restrain the Democratic Supermajority in the state legislature.
[UPDATE] Lefty California politics blog Calitics offers its its version of How We Got Here (Howard Jarvis, Pete Wilson, and the Governator) as well as its opinion on how the surplus was achieved (a combo of tax hikes and austerity):
The underlying structural revenue shortfall [ed: Prop 13; 1998 tax cut] never went away. When the housing bubble burst and the nation slid into recession in 2007 (California got there a few months earlier) the revenue shortfall problem was again revealed. And again, Republicans demanded and won not just more spending cuts, but also more tax cuts. Even as billions were being cut from schools, Republicans leveraged the 2/3 rule for passing budgets to win new corporate tax loopholes. California became a laughingstock, a national poster child for supposed liberal fiscal excess.
By 2009 Democrats finally agreed with what we progressives had been saying for years: that the only way to fix the state's financial woes was not to cut spending, but to take power away from Republicans. On New Year's Day 2013 I described how this was done. In 2010 Prop 25 passed, ending the 2/3 rule and eliminating Republican power over state budgets (though not yet over tax increases). That same year, Democrats swept all statewide offices, including retaking the governor's mansion. In 2012, Democrats went further, winning a 2/3 supermajority while also ending the structural revenue shortfall with Prop 30. They even managed to close the corporate tax loopholes created in 2008, with Prop 39 passing by a healthy margin.