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California's budget deficit is back, Gov. Jerry Brown says

John Myers, Los Angeles Times on

Published in News & Features

SACRAMENTO, Calif. -- Less than four years after declaring California's budget balanced for the foreseeable future, Gov. Jerry Brown on Tuesday said the state is projected to run a $1.6-billion deficit by next summer -- a noticeable shift in the state's fiscal stability that could worsen under federal spending cuts championed by President-elect Donald Trump.

"The trajectory of revenue growth is declining," said Brown in unveiling his $179.5-billion plan for the fiscal year that begins in July.

The governor's sober assessment comes on the heels of several months of lagging tax revenue collections, a small but impactful change that could stifle the plans of his fellow Democrats in the Legislature and give fuel to Republicans' demands to impose additional cuts.

Brown's budget advisers lowered the official tax revenue forecast, in part, because of slower than expected growth in wages. They also reduced expectations for sales and corporate taxes because of broader national trends.

Brown proposed to address the deficit primarily through slowing the growth in spending on public schools by $1.7 billion, a change that brings funding down to the minimum required by formulas enshrined in California's Constitution. The governor also proposed scrapping $1.5 billion worth of spending ideas left over from last year's budget negotiations, including higher subsidies for child care programs and awarding new college scholarships to California students from middle-class families.

"To manage unreliability requires prudence," Brown said of his decisions to address the projected budget shortfall.

The governor's fiscal blueprint is the ceremonial first pitch in Sacramento's annual budget writing season, and, as such, is likely to shift in its detailed ways to address fiscal pressures faced by the state. No change could be more dramatic than the fate of some $105 billion in expected federal funds, stretched across a variety of services.

The most consequential of those is the $16.1-billion subsidy for Medi-Cal, the program offering health care to the state's most needy, provided through the Affordable Care Act. Those funds have helped the state add more than 3.8 million people to the Medi-Cal system, a network of providers that reaches one in every three Californians.

Republican leaders in Congress and the president-elect have vowed to repeal the law championed by President Barack Obama, though they have yet to identify when or how that will happen. That uncertainty is why Brown's new budget plan does not officially lay out a path forward, though the governor made it clear on Tuesday that he thinks GOP leaders should rethink their political promises in regard to Obamacare.

"That's very bold and, I think, a move that isn't very consistent with decency," the governor said Tuesday.

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