Legislature Eyeing $2 Billion Surplus

The first public hearing on Tuesday on the governor’s proposed 2016-17 budget held portents of an upcoming battle over $2 billion in “rainy day” money in Gov. Jerry Brown’s (D) budget plan.

“The numbers continue to look good [for the state’s economic recovery],” committee chair state Sen. Mark Leno (D-San Francisco) said on Tuesday at a hearing of the Senate Budget and Fiscal Review Committee.

“With an additional $2 billion set aside in the … rainy day fund above and beyond what the voters told us they would like to see in it, that will be at least part of the playing field as to our debate,” Leno said.

Leno said he’d like to see more balance between fiscal prudence and the needs of the people who live here.

“What is appropriate for continuing payment of debt and for reserves and at the same time recognizing that so many Californians who had been hurt at the time by the recession have not seen much recovery or re-investment in the programs on which they rely,” Leno said.

Keely Bosler, chief deputy director of the Department of Finance, held up the same pretty verbal picture of the state’s improving finances, but with a different caption:

“The state’s economy continues to strengthen and with that increased revenues are coming into the state,” Bosler said. “Despite all of these good things, the budget in the state of California does remain precariously balanced over the long term.”

The risk in setting aside the rainy day money is that it’s difficult to retrieve, said Mac Taylor, executive office analyst in the Legislative Analyst’s Office. The money can only be tapped during a budget emergency such as a natural disaster or when there’s not enough money to cover existing spending.

“This is an area where the Legislature needs to be really careful,” said committee member state Sen. Bill Monning (D-Carmel). “Are we really in a position to lock with a key an additional $2 billion?”

State Sen. Holly Mitchell (D-Los Angeles) said health care, the managed care organization tax, child care and more funding for the Department of Developmental Services programs would head her list.

“The administration clearly believes what you proposed [in the 2016-17 budget] will counter the effects of poverty,” Mitchell said to Bosler at the hearing. “But I’m clear that it’s simply not enough.”

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