Read Gov. Brown’s Budget

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

State budgets are never perfect. That’s because they employ cash-basis budgeting, which excludes accrued but unpaid expenses. (That’s how states are able to record surpluses when under generally accepted accounting principles they would record deficits.) The unrecorded expenses automatically turn into unfunded liabilities that, with interest, must be paid off down the road. But Gov. Brown’s document makes clear what cash-basis budgets do not: billions of dollars will be needed down the road to meet unfunded liabilities, which Brown tells readers grew “by $15 billion since the January budget alone.” Brown then adds that “a moderate recession will drop state revenues by over $20 billion annually for several years,” and encourages the legislature to save money now.

Sometimes it’s not costly when legislators don’t read budgets in their entirety. But Brown has changed that dynamic. This time it’ll be very costly if legislators don’t read the budget, plus schedules in the Governor’s January budget.

The document also contains a reminder to legislators that the state’s unemployment rate stubbornly remains above the national rate, as it has since the 1980’s. That’s addressable by the legislature, which should start by knocking down unnecessary barriers erected in favor of special interests.

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