Governor Jerry Brown released his proposal for the 2017-2018 California State Budget last Tuesday, Jan. 10. The plan focuses on balancing the budget and includes combating poverty, improving transportation infrastructure and increasing education funding, as well as plans to cut the Middle Class Scholarship program that many UC undergraduates benefit from.
In his proposal, Governor Brown stated that this year’s budget is “the most difficult that we have faced since 2012.” If action is not taken soon, California faces a $2 billion budget deficit.
“In all likelihood,” wrote Governor Brown, “the coming years will bring even worse financial news — either from the start of the next inevitable recession or from changes at the federal level. This uncertainty about the future makes acting responsibly now even more important.”
The $2 billion deficit is caused by an expected revenue forecast that is $5.8 billion lower than expected, along with a shortfall in Medi-Cal. In previous years, periods of balanced budgets have been followed by massive deficits. After four years of balanced budgets, California is historically overdue for a deficit, which is why Governor Brown stresses the importance of taking immediate action with this year’s plan.
First and foremost, $3.2 billion in budget solutions will be spent to combat the deficit. This includes adjusting Proposition 98, which was passed in 1988 and sets aside a minimum percentage of the budget to be spent on K-12 education. With this adjustment, K-12 funding still increases by $2.1 billion, bringing total funding to $73.5 billion. Per-pupil expenditures for this year are $10,910, an increase of $331 from last year. The state also aims to provide special education funding directly to school districts. As usual, the primary focus for school programs and funding will be students’ needs.
For higher education, tuition at community colleges remains the same, but tuition at UC and CSU schools will increase, the former by 2.5 percent and the latter by 5 percent. As a result, Cal Grant costs increases by $17.7 million for UC students and $24.9 million for CSU students. Additionally, this year, the Middle Class Scholarship program for new UC and CSU undergraduate students will be eliminated and only renewed for the 37,000 students who received the scholarship last year.
Steps to counteract the effects of poverty will be taken. Minimum wage will increase to $11 per hour in 2018 and then eventually to $15 per hour over time. Child care provider rates will also increase. Should the federal government decide not to repeal the Affordable Care Act, health care coverage under it will be expanded. The budget also plans to repeal the CalWORKS maximum family grant rule, which denied aid to children of parents who already receive aid.
To reduce greenhouse gas emissions, $3.4 billion in auction proceeds has been allocated to fund transit and high speed rails, recycling programs, affordable housing near jobs and home energy upgrades, especially in disadvantaged communities.
In regards to infrastructure, efforts to repair and maintain highways, roads, bridges, levees and state government facilities continue. The deferred maintenance fee for California’s infrastructure totals approximately $78 billion. The budget sustains the proposal first announced in 2015 to provide $4.2 billion annually for maintenance purposes.
The budget text also noted that California’s economic state is currently up in the air, at least until president-elect Donald Trump’s Jan. 20 inauguration.
“The incoming presidential administration and leaders in Congress have suggested major changes to Medicaid, trade and immigration policy, and the federal tax structure,” according to the proposal. “Many of the proposed changes could have serious and detrimental effects on the state’s economy and budget. At this point, it is not clear what those changes will be or when they will take effect.”
In preparation, 10 percent of tax revenues will be put into the state’s Rainy Day Fund which is expected to have a balance of $7.9 billion by the end of the year.
“While a full Rainy Day Fund might not eliminate the need for further spending reductions in case of a recession or major federal policy changes that trigger a budget crisis, saving now would allow the state to spend from its Rainy Day Fund later to soften the magnitude and length of any necessary cuts.”
The budget will be examined and revised in May before its June enactment.