- The 2017-2018 proposed annual California Budget, introduced by Government Brown, in January of 2017, was recently revised this May after taking into consideration tax collection from January to April (see our Newsletter for details).
- Consistent with the last several years as the California economy has recovered from the 2007-2010 economic recession, the California annual budget proposal has once again is expanding government spending. While the January annual budget proposal initially entailed a $5.8 billion reduction in revenue from last year, since the growth of the stock market in January, revenue is now projected $2.5 billion higher than the 2016 budget. This 2017-2018 annual budget proposal entails a total General Fund Expenditure of $124.01 billion, an increase of $1.2 billion from 2016-2017, and an estimated total General Fund Revenue of $125.9 billion, an increase from last years General Fund Revenue of $118.5 billion.
- This additional spending in 2017-2018 is expected to address issues in the State's water system, increase money for K-12 Education, sustain county fiscal health, bring back child care, fund the increase of the minimum wage to $11 an hour in 2018, expand Medi-Cal to cover preventive dental benefits and expand health coverage to include the millions of Californians covered by the Affordable Care Act, as well as undocumented children. If passed by the Legislature and signed into law by Governor Brown will include for the first time California will offer Earned Income Tax Credit for the poorest, employed families in California.
- Despite the proposed increased spending and an improved economic outlook from past years, Governor Brown has emphasized fiscal constraint in this year’s budgeting process. He wants to channel $1.7 billion from The State General Fund Revenue into the Budget Stabilization Account/”Rainy Day” Fund, in anticipation of potential economic recession. Experts consider this year’s budget to be one of most fiscally conservative and constrained budgets since 2012. Conservative spending is expected to not only counteract potential economic recession, but is considered by many to be preparation for the potential defunding of health care spending by the federal government under the Trump Administration.
- Specifically, State expenditures in areas of Business, Consumer Service and Housing (-22%), Labor and Workforce Development (-58%), Natural Resources (-5%), Environmental Protection (-5.6%), Government Operations (-58%) and Health and Human Services (-2.9)% will be smaller than last year, while K-12 Education (+5.4%), Transportation (+7.1%) and Statewide Expenditures (+170.2%) have seen budgetary increases from last year. The largest increase in State spending for 2017-2018 will come from a $2.7 billion increase in K-12 Education, while the largest decrease in State spending will result from a loss of $1.04 billion in government operations.