Sacramento, California - Governor Edmund G. Brown Jr. today proposed a $122.6 billion General Fund budget plan for 2016-17 that makes significant increases in funding for education, health care and state infrastructure, while bolstering the state’s Rainy Day Fund and paying down state debts and liabilities.
When Governor Brown took office, the state faced a massive $26.6 billion budget deficit and estimated annual shortfalls of roughly $20 billion. These deficits, built up over a decade, have now been eliminated by a combination of budget cuts, temporary taxes and the recovering economy.
The Governor’s budget letter to the Legislature urges continued budget restraint.
Significant details of the Governor’s 2016-17 State Budget include:
Builds Up the Rainy Day Fund
The Governor’s budget makes a supplemental deposit of $2 billion into the state’s Rainy Day Fund – boosting the balance from 37 percent today to 65 percent of its constitutional target. Building up the fund is the best insurance policy against deep budget cuts in the next economic downturn.
Secures Health Care Funding
The managed care tax is set to expire at the end of the current year. It is a critical component of the state’s financing for health care. The budget proposes a tax reform package that includes a replacement managed care organization tax for three years. The package provides a net reduction in taxes paid by the private health care industry, secures funding for General Fund Medi-Cal expenses and provides an opportunity for targeted rate increases for developmental disability services. Under the federal health care reform optional expansion, 3.4 million additional residents now receive health coverage and the budget allocates $740 million General Fund for the state’s share of costs. These costs will grow to reach $1.8 billion General Fund by 2020-21.
Invests Significantly in K-12 Education
The budget boosts school spending per student to $10,591 in 2016-17 – an increase of nearly $3,600 compared to 2011-12 levels. The budget provides a fourth-year investment of more than $2.8 billion in the Local Control Funding Formula, which focuses on students with the greatest challenges to success, bringing the formula to 95 percent implementation. The budget also proposes a $1.6 billion early education block grant that combines three existing programs to promote local flexibility, focusing on disadvantaged students and improved accountability.
Keeps College Tuition Flat
The budget keeps tuition at 2011-12 levels for another year for the University of California and California State University, maintaining affordability while continuing to help students reduce the time it takes to successfully complete a degree.
Strengthens State Infrastructure
The budget reflects the Governor’s transportation package, first outlined last summer, that would provide $36 billion over the next decade to improve the maintenance of highways and roads, expand public transit, and improve critical trade routes. The budget also includes $807 million ($500 million General Fund) for critical deferred maintenance at levees, state parks, universities, community colleges, prisons, state hospitals and other state facilities. The budget supports a major investment in renovating Sacramento’s aged and inadequate state office infrastructure with a $1.5 billion General Fund down payment to begin that work for three buildings, including the State Capitol Annex.
Addresses Climate Change
The budget continues the Administration’s actions to reduce greenhouse gas emissions through a $3.1 billion Cap and Trade Expenditure Plan that will reduce emissions through programs that support clean transportation, reduce short-lived climate pollutants, protect natural ecosystems and benefit disadvantaged communities.
Counters the Effects of Poverty
The budget reflects the implementation of the increase in the state’s minimum wage to $10 per hour effective January 1st and provides funding ($380 million) for the second year of the Earned Income Tax Credit to help the state’s poorest working families. The budget also provides a cost-of-living increase for aged, blind and disabled Californians in the Supplemental Security Income/State Supplemental Payment (SSI/SSP) program— the first state increase in grant levels since 2006.