SACRAMENTO May 11, 2018 – Governor Edmund G. Brown Jr. today released a revised state budget proposal that boosts education funding to an all-time high, fills the Rainy Day Fund to the brim and directs billions of dollars in one-time surplus funding to combat homelessness, improve mental health services and rebuild crumbling infrastructure.
“We’re nearing the longest economic recovery in modern history, and as Isaac Newton observed: What goes up must come down,” said Governor Brown. “This is a time to save for our future, not to make pricey promises we can’t keep. I said it before and I’ll say it again: Let’s not blow it now.”
As California’s economy has recovered from the Great Recession, the state has continued to invest in its core priorities, including: increasing K-12 education funding to record levels; raising the minimum wage; expanding health care coverage to millions more Californians; improving transportation and water systems; and paying down debts.
Significant details of the revised budget include:
Counteracting the Effects of Poverty
Since 2012, California has committed approximately $21 billion in new annual funding to maintain a strong safety net for those with the greatest needs. The May Revision builds on this commitment by expanding the state’s Earned Income Tax Credit program to workers between the ages of 18-25 and above 64, and adjusts income limits to reflect the minimum wage increase to $12 per hour in 2019. The budget also continues to provide billions of dollars to pay for: the expansion of health care coverage; the restoration of low-income health benefits eliminated during the recession; the repeal of the maximum family grant rule in CalWORKs; and increases in child care and early education provider rates and the number of children served.
Saving for Uncertain Times
In 2014, voters created a Rainy Day Fund to save money when the economy is strong for uncertain times ahead. The May Revision maintains the January budget commitment to fully fill the fund. By the end of the current fiscal year, this fund will have a total balance of $9.4 billion growing to $13.8 billion by the end of 2018-19. Additionally, to further protect against the next economic downturn, the budget proposes to direct an extra $3.2 billion into the state’s traditional budget reserve fund.
Combating Homelessness and Investing in Infrastructure
California anticipates $8 billion in higher revenues through 2018-19 compared to the January budget projection. As a result, the state will keep its existing commitments to increase funding for Medi-Cal, Cal Grants, child care, In-Home Supportive Services and foster care reform, among other programs, while focusing the majority of the remaining funding on one-time expenditures in three areas:
- Infrastructure ($2 billion) – The state has huge liabilities from years of deferred maintenance and would use these funds for universities, courts, state facilities and flood control.
- Homelessness ($359 million) – The state will assist local governments to immediately address homelessness across the state, bridging the gap until new funding flows from new housing measures signed by Governor Brown last year.
- Mental Health Services ($312 million) – The state will provide funding for programs that help people with mental illness, including training for mental health professionals and early identification of mental health problems. This includes $254 million to help counties serve youth with mental illness.
To help address the state’s housing shortage, the May Revision also proposes to place the $2 billion “No Place Like Home” bond on the November ballot, which would expand housing opportunities for Californians with mental illness.
This budget proposal increases K-12 school funding by about $4,600 per student compared to 2011-12 levels. The state will fully implement the Local Control Funding Formula, correcting historical inequities in school district funding, and permanently increase the minimum per pupil funding school districts receive to help offset rising costs.
The May Revision maintains the 3 percent increase in funding for higher education proposed in January while continuing to keep tuition levels unchanged at both the University of California and California State University systems. Since the end of the Great Recession, the UC system has received $1.2 billion in new funding, the California State University system has received $1.6 billion and community colleges have received $2.4 billion. The May Revision also provides each university system with $100 million in new, one-time funding for deferred maintenance.
The May Revision also refines the state’s California Online College plan and the new funding formula for community colleges.
Fighting Climate Change
To date, the state has appropriated $6.5 billion in cap-and-trade auction proceeds to programs benefitting people across California. Earlier this year, the Administration allocated $1.25 billion in cap-and-trade auction funds to continue the state’s efforts to aggressively reduce greenhouse gas emissions and combat climate change.
The May Revision proposes $96 million, which includes additional auction proceeds and other funds, to implement the Forest Carbon Plan and take other actions to protect California’s forests against the increasing threat of disastrous wildfires. This $96 million comes in addition to $160 million proposed in January’s cap-and-trade expenditure plan to support forest improvements and fire protection.
Additional details about the Governor’s May Revision can be found at www.ebudget.ca.gov.