California

Jerry Brown: California's Recovering, So Let's Spend, Spend, Spend!

Education and health spending on the rise, but those commitments still can't kill high-speed rail

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Gov. Jerry Brown indicates how much high-speed rail the state's cap-and-trade auction revenue can pay for

Calif. Gov. Jerry Brown released his proposed budget for 2013-14 Thursday, increasing education spending while having an extremely optimistic outlook of California's economic future.

What's getting most attention (because the increased spending and rosy outlook were already gimmes in the reporting of the state's economy), is Brown's declaration that the state's budget deficit – estimated at well over $20 billion just last summer – was all but gone.

Not getting as much reporting (in favor of pretending the state has faced deep-to-the-bone cuts) is that the state's deficit is being turned into debt.  To be fair to Brown, though, he's not ignoring it in his budget summary (pdf):

The state's budget challenges have been exacerbated by the Wall of Debt—an unprecedented level of debts, deferrals, and budgetary obligations accumulated over the prior decade. In 2013?14 alone, the state will dedicate $4.2 billion to repay this budgetary borrowing—paying for the expenses of the past, instead of meeting current needs. Moving forward, continuing to pay down the Wall of Debt is key to increasing the state's fiscal capacity. In 2011, the level of outstanding budgetary borrowing totaled $35 billion.

Brown is also aware in the report that California's upcoming recovery is based mostly on projections that may turn out to be a bit too optimistic. California is also participating in the Affordable Care Act's Medicaid expansion, and rising health care costs are noted as a potential budget buster. The budget adds $1.2 billion to state Health and Human Services agencies. Even California is waking up to the possibility that the Affordable Care Act might not actually make care more affordable.

While Brown may give good lip service to the state "living within its means" in speeches and in his summary, the high-speed rail plan still lives. The funding for the initial segment in the Central Valley has already been budgeted and is expected to begin construction later this year. Brown has proposed in the past using the money the state was hoping to get from its upcoming cap-and-trade auctions to possibly help fund the train's $68 billion price tag. He is still proposing using cap-and-trade revenues in his latest summary to help fund the train. And that's a problem, because the first auctions in November brought in a grand total of $55 million to the state. The state was expecting to rake in $1 billion in its first auction. $55 million won't even get the union workers who will be guaranteed all the jobs building the train out of their beds.

Calling for fiscal responsibility while pushing this boondoggle is the equivalent of President Barack Obama insisting the federal government has more important problems than marijuana users while the Drug Enforcement Agency continues raiding legally operating pot dispensaries. If the economy doesn't improve as projected, California is hosed. If the economy does improve, Californians can enjoy watching their revenue get thrown away at absurd, ego-driven, crony-enriching public projects.

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  1. Yeah, yeah, all true, and depressing, and stupid. But by God, man, in the last sentence it’s Californians, not Californian’s!

    1. I was just testing to see if folks were reading all the way through.

      1. Scott, it’s Friday; I’m only a grammar-Nazi on Mondays and Tuesdays. Others have their special days.

  2. I wish it were geologically possible for California to sink in the ocean. I am not sure there are any redeeming qualities left.

  3. “And that’s a problem, because the first auctions in November brought in a grand total of $55 million to the state. The state was expecting to rake in $1 billion in its first auction.” Eh, close enough. I’m sure the projection that the deficit will be gone this year isn’t based on revenue assumptions like this one.

    1. “I’m sure the projection that the deficit will be gone this year isn’t based on revenue assumptions like this one.”

      Correct! The actual assumptions that lead to the surplus have something to do with moonbeam’s Corgi farting pixie dust.

    2. Why buy carbon credit offset to assuage your conscience when you can do it for free? http://www.freecarbonoffsets.com. I got me a couple quadrillion carbon offset and it cost me nothing.

  4. “If the economy does improve, Californian’s can enjoy watching their revenue get thrown away at absurd, ego-driven, crony-enriching public projects.”

    In which case, CA’s taxpayer is *still* hosed

  5. Jerry Brown: California’s Recovering, So Let’s Spend, Spend, Spend!

    Well that’s a crappy headline. I like this one better.

    Feeble Old California Man Further Tarnishes Political Legacy!

  6. I was trying to calculate how long it would take to pay off all the debt if spending increases 5% for every 3.3% increase in revenue, when it hit me that the solution to the problem is really quite simple – if California borrows a buttload of money merely to balance their budget, they just need to borrow two buttloads of money instead and run a surplus!

    Damn, I think I’ll go get me a job as one of them government accountant-type peoples.

  7. Am I missing something? Nobody has mentioned the billions in long term pension liabilities… is that obligation somehow divorced from the annual budget?

    1. That’s part of the debt in the budget and mentions it is something that needs to be address. But then, of course, does not address it.

  8. Oh, but just wait until that high-speed rail line gets going. Lack of easy access has clearly been the only thing holding Fresno and Bakersfield back.

    1. Building the first part of the high speed rail just north of Fresno is the stupidest part of the plan. The rail is for the benefit if people in the LA and SF areas, so the rails should start there, otherwise it’s totally useless until it is completely finished. It would be like starting the Transcontinental Railroad in Provo.

      Or maybe it’s just Machiavellian planning. If the funding dries up half way through when the rails only goes from Stockton to Palmdale, they can cry that they need more money or it will all have been in vain.

  9. I would love to laugh at the Californians, but I live in Illinois.

    1. Heh. We may be screwed out here, but at least we still have jobs!

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