California budget swells to almost $200B

California budget swells to almost $200B
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California Gov. Jerry Brown (D) on Friday unveiled a nearly $200 billion budget proposal aimed at stocking away billions for the next economic downturn.

The $199.2 billion proposal, the largest in California’s history, would add another $3.2 billion to the state’s reserve fund, money that could be used when the economy once again goes south. That would leave $13.8 billion in the rainy-day fund, first created by voters in a 2014 ballot measure.

“We’re nearing the longest economic recovery in modern history, and as Isaac Newton observed, what goes up must come down,” Brown said. “This is a time to save for our future, not to make pricey promises we can’t keep.”


The booming stock market and tax revenues coming in well above expectations mean California budget officials will see an $8.8 billion surplus, $3.8 billion more than Brown’s initial budget assumed in January. 

Brown proposes spending $2 billion on infrastructure upgrades after decades of deferred maintenance have left roads, bridges and dams in disrepair. His budget also adds $359 million to address a growing homeless crisis in cities such as Los Angeles and San Francisco.

An annual study by the federal Department of Housing and Urban Development (HUD) estimated there are more than 130,000 homeless people in California, about a quarter of the total homeless population nationwide. The majority of those experiencing homelessness in California are not in shelters, according to the HUD report.

On Thursday, Brown signed an executive order that will spend an additional $96 million on forest management. The state has spent hundreds of millions of dollars in recent years to fight forest fires, like those that ravaged California’s wine country last fall. 

Despite the surplus, Brown said he would propose adding a $2 billion bond on the November ballot to build new housing for those with mental illnesses.

The state legislature, dominated by Democrats, must pass a budget by June 15. Some in the legislature have proposed spending $1 billion to reduce homelessness and another $1 billion to bolster the state health-care system, potential flashpoints between the liberal lawmakers and the governor.

California’s tax laws make the state highly dependent on volatile revenue streams, such as capital gains taxes. Brown, who returned to office in 2011 facing a $20 billion budget hole, has long reminded legislators of that volatility, comparing today’s budget surplus to the deep deficits the state faced during the recession.

In a statement, state Treasurer John Chiang — one of three top Democrats vying to succeed the term-limited Brown — said California needed to overhaul a tax system first established before World War II.

“What California needs now — while we are still able to govern outside of crisis — is a major reconstruction of our tax system,” Chiang said. He called on legislators to “tame the current feast or famine revenue volatility that makes it nearly impossible to build and plan for the long term.”