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Just how 'healthy' is the State's rainy day fund?
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Say what you want about Jerry Brown — and there’s a lot to say about his one track mind on high speed rail as well as his Twin Tunnel religion — but the governor has nailed it again when it comes to prudent budgeting.
Remember back in June when members of his own party in the California Legislature were yapping non-stop about how the state budget should be more generous to the menagerie of downtrodden special interest groups now that the state was supposedly awash in money? They were particularly irked that the $122.5 billion budget that Brown succeeded in putting in place had a projected $11.5 billion rainy day fund. They wanted to claw into it to fund their various causes while Brown warned it likely wouldn’t be a big enough cushion.
Then a few months ago when the governor vetoed a bid to drop the sales tax on feminine hygiene products without the legislature making corresponding cuts in state spending to replace the revenue that would be lost, some of them trash talked Brown because he adhered to fiscal discipline on day-to-day spending.
The California Legislature is overflowing with politicians that act like a kid in a candy store with a dollar burning a hole in his pocket.
Their lack of fiscal restraint and desire to sympathy spend at first glance would seem to be set to gain traction now that the California Legislature is in the clutches of a Democratic supermajority. That might frighten Republicans, conservatives or whoever but it is far from a slam dunk. Not only do not all Democrats think alike, but there are storm clouds on the horizon that may make the California Legislature wish they had pressed Brown to create a rainy day fund of biblical proportions.
Two of those clouds —Medi-Cal and state worker demands — have the ability on their own to almost drain the rainy day fund in 40 days and 40 nights.
The pending rollback, restructuring or whatever the Republicans end up doing with the Affordable Care Act has the potential to rip a multi-billion dollar hole in the state budget.
As things stand now, the expanded Medi-Cal added 3.8 million people and pushed the federal subsidies to the program up to $15 billion this year.
At the same time another 1.4 million Californians joined Covered California — the state exchange developed under the auspices of the ACA.
Meanwhile, the largest state employees union — the 95,000 member strong Service Employees International Union Local 1000 — is threatening to strike essentially over heath care coverage.
They are not happy with the state's offer of almost a 12 percent pay increase over the next four years. That’s because what are basically 3 percent annual pay raises are being offset and then some with a 3.5 percent employee contribution to retirees’ health care.
There are a lot of private sector Californians out there that would to be happy to be treading water given they have stagnant wages against rising health care premiums.
Keep in mind those are just two of the storm clouds on the horizon. There are many more ranging from higher education budgets and pending tuition hikes to an unhealthy backlog of infrastructure needs.
Things aren’t likely to get too far out of whack as long as there is still a responsible adult in the governor’s office. All bets are off though after 2018 given how Lt. Gov. Gavin Newsom now stands as the frontrunner to replace Brown.
You may or may not have issues with some or all of Newsom’s liberal social stances. Either way, his position and the roles he played in gay marriage and legalizing recreational pot are background noises. What matters most for a governor is how they govern. That means how well the state fares delivering services day-to-day while living within its means.
The best litmus test for comparisons is how mayors of big cities operate. Brown did a Herculean job of being Oakland’s mayor, keeping a tight fist on expenditures while rolling out new initiatives to improve the economic and social fabrics of the city. Across the bay, when Dianne Feinstein  was San Francisco’s mayor she did the same thing to stop The City from going into the proverbial toilet. Newsom, who followed her a number of years later, was a spendaholic of epic proportions. How bad was Newsom? In 2008 after every other major city in the state — and most of the country for that matter — had come to grips with the new reality of the Great Recession, Newsom rammed through a city budget over the objections of city financial experts that warned his gigantic new spending initiatives were out of step with reality. In short order, Newsom had to retreat.
There is hope now that former Los Angeles Mayor Antonio Villaraigosa has entered the race for governor. Villaraigosa is more level-headed than Newsom when it comes to spending money and keeping a city on even keel.
Voters should be more worried about a governor’s handling of budgets than they are his position on social issues.
The two Democrats may mirror each other on many social issues but when it comes to having Brown’s adult-like outlook on day-to-day operating finances, Villaraigosa is much closer to the budget discipline that Brown represents than Newsom.