State’s Leaders Facing Problems, Not Kicking the Can

Steven Maviglio
Principal of Forza Communications, a Sacramento-based public affairs/campaign firm

The Amazing Carnac he isn’t.

When trying to forecast the state’s fiscal situation in 2016 in a recent Fox&Hounds column, Joe Mathews made one prediction we can all agree on: the taxes raised from Proposition 30 fade away in 2016. But his “the sky is falling” projections about what will happen with the state’s economy and budget that year don’t add up.

Without question, the Federal Court order hanging over the head of the state is forcing the spending of hundreds of millions of dollars and is another pressure. It is unfortunate at a few prison inmate lawyers and judges are forcing this spending in this area of the budget. That being said, a renewed commitment to long term solutions – while they may have costs – will also help bring expensive prison spending down.

That’s why it is important to note that passing Prop 30 was just a part of the overall solutions that the Legislature and the Governor have done to end structural deficits of over $25 billion, and bring back stability. Our economy is humming along (the state just set a record for the most consecutive months of job growth) and the state’s budget has a surplus, even with the court order on prisons.

So even when we lose the temporary taxes and deal with increased pressures, we are in a night and day situation from where we were just a few years back when Governor Schwarzenegger was in office and Republicans routinely blocked budgets and pushed for tax cuts.

At this point in time, it is impossible to predict exactly where the state finances will be in 2016. Remember this: the Legislative Analysts Office and Department of Finance were $3 billion apart in their forecast for the next 12 months. Longer-term term forecasts are even more difficult.

That’s why the Democratic leadership is smart to be taking a cautious approach on revenues. Case in point: Speaker John Pérez is leading the charge for a Rainy Day fund that will capture spiking capital gains revenues and preserve them for economic down turns. And we all know Governor Brown is well-known for his prudent approach to state spending.

Meanwhile, the Governor and the state’s leadership is tackling the big issues. For example, pension changes passed last year are expected to save the CalPERS alone $55 billion.

What will the state budget and economy be like three years from now? No one knows. But we do know this: the state is on the right track thanks to tough decisions being made by the state’s leadership.

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