Analyst Calls California Budget Proposal 'Prudent'

SACRAMENTO (AP) — Gov. Jerry Brown is on the right track with his 2014-15 budget proposal by recommending that California devote billions of dollars in new revenue to start paying down its massive debts, the Legislative Analyst's Office said Monday.

The governor's plan would "place California on an even stronger fiscal footing" as the state emerges from recession, analyst Mac Taylor said in his review of the spending proposal released by the governor last week.

Brown's budget forecasts a $106.8 billion general fund, the highest in state history. The Democratic governor wants to boost K-12 funding by nearly $4 billion and spend $11 billion paying down debts, including $6 billion more that is owed to schools from previous budgets where education was underfunded. He is proposing to put $2.3 billion in reserves, including $1.6 billion in a rainy day fund for fiscal emergencies.

The review by the legislative analyst, an independent and nonpartisan arm of state government, warns against new spending commitments other than toward education and notes that the Legislature could revise some of Brown's spending priorities in the months ahead.

Lawmakers have until mid-June to send the governor a balanced budget.

Taylor credits California's rebounding fortunes to a recovering economy, soaring stock market, relatively restrained spending and new revenue from Proposition 30. Under the initiative pushed by Brown in 2012, voters approved temporary increases in the state sales tax and income taxes on the wealthy.

The analysis says anticipated growth in the U.S. economy creates a "significant possibility" that California will see billions more in additional revenue by May, when the governor issues his revised spending plan for the fiscal year that will start in July.

The report issued Monday also recommends:

— That the state set aside money this year toward $80 billion in unfunded liabilities in the state's teachers retirement fund. Brown has said he wants to meet with representatives of school districts and teachers unions this year to address the problem. The legislative analyst notes that it will be "a very expensive proposition," starting at $5 billion a year and growing. He recommends that future benefits "be paid completely by districts and teachers over the long term."

— That the Legislature consider a host of proposals for a rainy day fund, including Brown's budget recommendation, which would replace a constitutional amendment that is scheduled for the November ballot.

— That the Legislature reject Brown's plan to spend $250 million out of $850 million in cap-and-trade funds on the high-speed rail project, saying it is unlikely to be the most efficient way to reduce greenhouse gas emissions and is "legally risky."

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