New Governor Warns of Painful Budget

Gov. Jerry Brown during his inauguration this week again warned that the spending plan he is scheduled to unveil next week will include painful cuts.

"It is a tough budget for tough times," Brown said. "Choices have to be made and difficult decisions taken.”

Brown also recently convened an Education Budget Summit where he explained that California’s budget gap has now grown to more than $28 billion.  The state budget promises to be worse this year than it was last year, he said.

Absent permanent solutions, state deficits will persist for years, extending beyond 2015, Brown said.  Already, California ranks among the bottom of the nation in terms of K-12 per pupil expenditures, but with roughly 40 percent of the state budget allocated for education, schools are likely to face more cuts.

At the same education summit, State Treasurer Bill Lockyer said California’s debt has increased significantly since 2003, and that the state’s reliance on one-time solutions, including deficit borrowing, has weakened its credit rating.  Lockyer cited several negative commentaries about California from rating
agencies including Standard and Poor’s, which described the state Legislature’s inability to meet fiscal obligations.  S&P noted California’s “loss of legislative resolve to maintain sufficient liquidity to fund both the obligations with prior claims on general fund cash (for education) and the state’s debt service payment obligations.”

Lockyer noted that another rating service, Fitch, says California’s “institutional weaknesses, including inflexibility imposed by voter initiatives and a partisan policy-making environment, have repeatedly delayed action on addressing fiscal challenges, resulting in unsustainable budgetary solutions and exacerbating future-year budget making.”