Known for blunt and colorful remarks, Governor Jerry Brown choose his words carefully talking about California’s budget and economy Tuesday at the Capitol.
“This is not the time to break out the champagne…it’s a call for prudence, not exuberance,” said Brown.
Speaking at the presentation of his revised state budget, Brown called the budget “solid” but acknowledged the next 14 months are a bit of an uncertainty. It seems Brown thinks California should invest in the long term by bolstering education yet that it must also stay frugal, since the state’s economic recovery and revenue are under some pressure right now.
As California Forward’s Jim Mayer opined last week about a recent revenue windfall, “Lawmakers should treat the $4.5 billion as “one time” money, as opposed to a permanent growth in revenue. Why? Because that’s probably what it is.”
Citing floundering economies abroad and pressures coming out of Washington, Brown gave reporters the reasoning behind a recent state economic projection showing a slowdown.
“The news about the economy has dropped,” said Brown. “Four percent growth has become two percent growth. The people who put this budget together in January didn’t anticipate the sequester and didn’t anticipate the payroll tax restoration. Both of those have hit our economy.”
The best way to increase state revenues in the long term, of course, is to create more middle class jobs. The Governor understands that as well as anyone. And given the complexity of California’s economy, which is a really a series of regional economies, California Forward and the California Stewardship Network have been gathering local leaders and business people in 16 different regions around the state to discuss what needs to happen in order to increase jobs and improve the state’s ability to compete in a global economy.
The intel gathered at the regional meetings will be shared at the California Economic Summit in Los Angeles in November. At many of those meetings has been the Governor’s own head of Business and Economic Development, Kish Rajan, who has been listening to these local leaders talk about the need for regulatory reform, better workforce preparation and infrastructure investment.
“Working with regional leaders, Kish Rajan and others who have the goal of creating more middle class jobs for California is the very heart of our work,” said Susan Lovenburg, who leads the Economic Summit for California Forward.
The budget does include some notables for those doing business in California. The new-jobs hiring credit and the sales tax exemption for manufacturing were called by Robert Lapsley, President of the California Business Roundtable, a critical first step to keeping businesses here and attracting new ones.
“The California Business Roundtable commends the Governor for his prudent and balanced May revision of the proposed state budget,” said Lapsley in a statement reacting to Brown’s revision. “We believe it is the right course given the current and projected state of California’s economy.”
Despite Brown’s general tamping down of expectations, the budget’s boost to education with Prop 30 revenue looks like an important long-term bet when it comes to prepping a better workforce.
For higher education, the budget shows CSU spending will be up $1,953 per student and UC spending up $2,491 per student. And K-12 spending will increase by $2,754 per student through 2016-17.
Acknowledging a cycle of boom and bust in California, Brown pressed the notion that this budget represented something different from past plans.
“But it’s one that unlike those of the past is going to be very prudent because we’re sailing into rather some uncertain times.”
If it’s one thing that business doesn’t need, it’s uncertainty. But Californians working around the state at the regional economic forums look to combat some of the problems of doing business here.
