When California’s tax revenue began to increase, it complicated Gov. Jerry Brown’s months-long campaign for raising income, sales and car taxes.
Republicans went so far as to contend that with the revenue surge, the state’s budget deficit could be closed without raising taxes at all.
The governor, who had argued the taxes are needed to forestall catastrophic cuts in education and other services, switched rhetorical gears Monday as he revised his budget. His new pitch is that while new taxes are needed to close a smaller operating deficit, the “top priority” would be to repay a “wall of debt” the state has acquired during years of deficits.
“The wall of debt has to be brought down,” Brown told reporters, dismissing the Republican plan as one that would put the state “back into the hole again.” He pegged the deficit debt at nearly $35 billion and pledged to reduce it to $6 billion in the next three years.
The governor and his minions went to extraordinary lengths to make the overall debt problem, now and in the future, appear as menacing as possible.
Embellishments aside, the state has certainly gone overboard on borrowing during the past decade, not only upfront debt such as bonds, but backdoor borrowing such as deferrals of payments to schools and local governments and shifts from special funds.
Paying it down should be a priority use of the gush in revenue that is expected from a gradually improving economy and, if enacted, new taxes.
With the additional taxes, Brown’s budget sees general-fund revenue surging nearly 25 percent from $96.8 billion in 2011-12 to $119.5 billion in 2014-15. And the Legislature’s Democrats and their allies, such as public employee unions, would clearly prefer to spend the extra billions on education and health and welfare programs, not reducing the state’s debt.
Brown’s debt-reduction pledge probably would require some kind of constitutional spending limit to enforce — one that limited year-to-year increases in spending and required revenue above that limit to be used for debt retirement.
Brown said Monday he’s willing to include a spending limit in the package that goes before voters, but he was not specific. Unions and Democratic legislators have been leery, and it’s been one of the major hang-ups to any kind of bipartisan deal on the budget, along with GOP demands for public pension reforms.
Brown’s new budget moves a bit closer to the Republican position on fiscal priorities, but it also means he has put a bit more distance between himself and his fellow Democrats. That means a deal is still elusive.
Dan Walters’ Sacramento Bee columns on state politics are syndicated by the Scripps Howard News Service.