The Governor did not propose any new policy proposals; instead, he told lawmakers that California must prepare now for the inevitable recessions that occur frequently in the economic cycle.
The Governor stressed the need for the state to focus on keeping existing funding commitments and repairing deteriorating infrastructure. “According to economists at the Department of Finance, the next recession, even if it were only of average intensity, would cut our revenues by $55 billion over three years,” said Brown. “That is why it is imperative to build up the Rainy Day Fund — which was recently overwhelmingly approved by the voters — and invest our temporary surpluses in badly needed infrastructure or in other ways that will not lock in future spending.”
The Governor’s remarks built off of the fiscally-cautious tone he set several weeks earlier when introducing his proposed FY 2016-17
budget on Jan. 7, but he also reiterated the need for California to invest in its deteriorating roads.
“We have no choice but to maintain our transportation infrastructure,” said Brown. “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. Ideology and politics stand in the way, but one way or another, the roads must be fixed.”
The Governor’s budget release and state of the state remarks set the tone for upcoming discussions with the Legislature over the budget. The Legislature is expected to propose expanded spending in various areas. Legislative hearings on the budget will continue into the spring, and be further informed when the Governor issues his revised FY 2016-17 budget proposal in early May. During this time, the stock market and the global economy will be closely monitored for signs of economic slowdown which could dampen the financial outlook at the state and local level.
The League’s analysis
of the Governor’s proposal outlines significant proposals affecting programs of interest to cities. The League will continue to monitor state budget discussions and developments.