Back From the Fiscal Abyss, California Balances Its Budget
By ADAM NAGOURNEY
SACRAMENTO California has been Exhibit A for the fiscal upheaval that has rocked states throughout the recession. Year after year, California officials reported bigger and bigger deficits and sought to respond with spending cuts that left the state reeling.
So it was something of a moment when a jaunty Gov. Jerry Brown strode before cameras here on Thursday to present his budget for 2013-14.
The deficit is gone, Mr. Brown proclaimed, standing in front of an array of that-was-then and this-is-now charts that illustrated what he said were dramatic changes in Californias fortunes.
For the next four years we are talking about a balanced budget, he said. We are talking about living within our means. This is new. This is a breakthrough.
Mr. Brown was not just talking about a balanced budget. He projected that the state would begin posting surpluses starting next year, leading to a projected surplus of $21.5 million by 2014, a dramatic turnaround from the deficit of $26 billion billion, not million he faced when he was elected in 2010.
The governor said Californias finances were strong enough that he wanted to put aside a $1 billion reserve fund to guard against future downturns, and included in the budget sharp increases in aid to public schools and the state university system, both targets of big spending cutbacks.
The change in fortunes reflected cuts that were imposed over the past two years, a temporary tax surcharge approved by voters in November that expires in seven years, and a general improvement in the states economy.
Mr. Browns balanced budget projection was more optimistic than one put out by an independent legislative watchdog in November, and he pointed to a series of factors, including severe cuts in federal assistance, that could push California back into difficulty.
Yet it was the latest indication that the state appeared to be turning around. Even the less upbeat report by the watchdog group, the Legislative Analysts Office, said the state was facing a deficit of just $1.9 billion, which seems almost pocket change after the $26 billion projected deficit the state once confronted.
Mr. Browns news was hailed on both sides of the political aisle. This is a proposal that clearly shows California has turned the corner, said John A. Pérez, a Democrat who is the State Assemblys speaker.
Connie Conway, the Assemblys Republican leader, said it was good news for taxpayers that the state has made progress in getting our financial house in order.
But we havent fully solved our budget problems just yet, she said.
The budgetary distress has meant that, for years, the Legislature has battled over what to cut or, in some cases, what kind of maneuvers might be appropriate to avoid cuts. Good news or not, the announcement means that more, albeit different, kinds of battles were in the offing, lawmakers and Mr. Brown said.
Democrats now control two-thirds of the Assembly and Senate, and some of them have talked about restoring at least some of the social service cuts, like dental care for the poor, that were imposed to bring the state to this point, Mr. Brown said he understood the impulse to repair broken social services, but he warned against returning to a boom-and-bust pattern of spending during the good years, only to later struggle through debt.
We have to live within the means we have; otherwise we get to that situation where you get red ink and you go back to cuts, he said. I want to avoid the booms and the bust, the borrow and the spend, where we make the promise and then we take back.
Mr. Brown, who has always presented himself as something of a moderate in his party, suggested that in the months ahead, he would be an enforcer.
Its very hard to say no, Mr. Brown said. And that basically is going to be my job.
On that point, Mr. Brown found an unlikely ally in Ms. Conway. Now is not the time to enact massive spending increases that will reverse the progress weve made in reducing the deficit, she said.
On another contentious front, while Mr. Brown proposed a significant increase in school spending $2.6 billion he said he wanted a financing formula that would direct more money to poor students. Lawmakers said that could set off a fight between wealthier and poorer districts.
Mr. Brown, in presenting his budget, suggested that the turnaround should be a rebuke to a couple of characters who have written off California as a failed state, a reference to conservative commentators who have, for a year, questioned the states economic policies and its very future.
Now, Mr. Brown said, he wanted the nation to look to California, and to his example. He promised a combination of fiscal discipline and imaginative investment to complete the states restoration.
I would like to do something that would make California a leader and an example of what America has to do, he said.
