Looking Ahead—and Back—at the State of the State Address

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Governor Jerry Brown’s 14th State of the State address tomorrow undoubtedly will carry a defense of California policies in the era of President Donald Trump. But what else might we expect and hope to hear from the governor?

During last year’s State of the State Address, Governor Brown closed with the issue of climate change. Expect that to be a lead issue this year. Brown is sure to implore legislators to pass the cap-and-trade urgency measure to make safe the state’s cap-and-trade program for the long term that he requested when introducing his budget.

Brown’s now usual warnings about the budget and the danger of being excessive with taxpayers’ money is worth repeating. He led with such budget admonitions during last year’s speech. Budget uncertainties are greater than normal this year. Not only will Brown give his usual caution about the effects of an economic downturn on the state budget, but also we are sure to hear that actions in Washington could have profound effects on the budget.

Dramatic changes to the Affordable Care Act that are already in the works could cut deeply in California. The state relies on Washington for a good portion of the billions spent on Medi-Cal. Wouldn’t it be nice to hear a solution for moving people off Medi-Cal? One-third of California’s residents rely on the government subsidized health system. We talk about that high figure as if it is a fact we must live with. Isn’t it a disgrace that in the rich and powerful state of California so many must rely on the Medi-Cal system?

One way to move people out of poverty and away from government help is to improve the business climate for all of California. The state cannot be carried for a long period by the wealth generated in Silicon Valley, Hollywood and the like. Brown knows this. Will he announce plans to benefit small business?

One thing, of course, that would improve economic prospects would be a fix of the state infrastructure system. To Brown’s credit this has been a high priority item on the governor’s agenda, although little progress has been made.

Considering Brown’s recent budget proposal of raising a vehicle fee and gas tax to the tune of $4.3 billion a year for ten years to fix roads and highways, the governor might just re-use a line from last year’s address about improving infrastructure: “Yet, doing so without an expanded and permanent revenue source is impossible. That means at some point, sooner rather than later, we have to bite the bullet and enact new fees and taxes for this purpose.”

Can he make it happen? Will we hear more of the same rhetoric that the revenue is necessary with no offsetting reassurances to bring wavering moderate Democrats or opposing Republicans or the business community on board for a tax increase?

What concessions might the governor make on cost reforms? Labor costs are large, but in last year’s speech he praised strengthening the prevailing wage law, increasing the minimum wage and improving other workers’ benefits. Where can he go to convince doubters that there will be efficiencies and savings so that doubters might accept the “bite the bullet” tax increase proposal?

The governor in his last State of the State Address did not mention housing. The housing crisis has become more severe over the last year. Will it earn a mention in this year’s speech; will he try to revive his “by right” plan to ease restrictions on development? By speaking of that proposal during the State of the State it would signify the importance he puts in helping to solve the housing crisis.

On the other hand public employee pensions were part of last year’s speech. The governor congratulated legislators on steps taken to ease the pension and health care obligations. But those steps were tiny. Brown recognized that himself declaring that more must be done. “These liabilities are so massive that it is tempting to ignore them. We can’t possibly pay them off in a year or two or even 10,” the governor said.

Since that time, the California Public Employees’ Retirement System board set more realistic investment rates meaning government, that is the taxpayers, will have to kick in more money for pension obligations leaving less for other government services. The state faces increased liability first but local governments will soon follow. What message will Brown send to finally get a grip on this growing fiscal problem?

One positive improvement since last year’s speech is California’s drought situation. With storm after storm hitting the state, the drought has eased. Brown can take the opportunity to speak of the need to store water from the deluge. Don’t be surprised if he directs that conversation to advocacy for his Delta tunnels plan.

The State of the State address will be a combination of the traditional with the governor laying out his plans and hopes for California’s governance while taking a defiant stance to, and keeping a wary eye on, Washington.

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