Transcript: Press conference Q&A with Gov. Jerry Brown on the 2012-2013 California state budget
Press conference Q&A with Gov. Jerry Brown on the 2012-2013 California state budget:
Question: “If your deficit number is $9.2 billion, a good portion of that is the current year. I’m just wondering after a year of being governor can you talk about what’s that like to find missing the mark even by some $4 billion?”
Gov. Jerry Brown: “So you miss the mark if the federal government won’t let you make your Medi-Cal cuts. And we have to go back on bended knee and beg to be able to implement the Medi-Cal reductions that the legislature approved. So that’s one piece of it.
“The other is some of the revenues is uncertain. I mean, what if the Euro falls apart and Europe goes into a deep recession? That will affect our revenues. And those uncertainties – the ups and downs – of the capitalist economy are just what we have to put up with.”
Question: I asked the question because last year you also called it an honest budget. Some people would look at that and go it’s $4 billion more.
Gov. Jerry Brown: “No, it’s an honest budget but it’s not a fortune-telling budget. We don’t have clairvoyance at the Department of Finance. We probably need a little clair…or we don’t have remote viewing either, if you know what that is.
“So anyway… I want…Ana [Matosantos], did I fully explain – besides cuts there were some revenue adjustments?[Ana Matosanto speaking off-camera]
“What? The problem was worse than we thought…
“Remember, budget work is an art not a science, and we do our best. Even the Legislative Analyst has a different view than the Department of Finance, and that’s just the way it is.
“We’re in the ballpark, and the ballpark is that we’ve cut the structural deficit substantially. And we now have the possibility of eliminating over the next several years the deficits that have plagued California, but there’s a big if.
“We’ve got to hold the line on spending and make the tough cuts or something that’s equivalent to what I’ve put in this budget.
“And it’s going to be very difficult for the legislature to adopt some of these cuts.
“I think to put on the trigger cuts will also be difficult but without them, we can’t put together the balanced budget.”
Question: “Do you see the 15,000 positions being cut through attrition or through layoffs? Also, can you say that if the tax measure fails, do you have to suspend Prop 98?”
Gov. Jerry Brown: “First of all, the reduction – I don’t know there’s been any layoffs yet. We have people moving, for example, in corrections; we have people moving from Pelican Bay to other prisons throughout the state and they’re collaborating in spreading out the work when there are reductions.
“In terms of the 98 if the taxes don’t, no we won’t. It’s just that cuts will happen.
“By the way, 98 will go down automatically if the revenues don’t materialize. So 98 is a function of the revenues that come in. If the revenues that come in are lower than we project – and we’re projecting that taxes pass – then 98 goes down and the schools get cut.”
Question: “I want to ask about your approach to class size reduction. Do you eliminate the penalty on school districts that cannot comply? Can you talk a little bit about why you’re going in that direction?”
Gov. Jerry Brown: “Because we – yes – I want schools to have more authority to make their own decisions.
“And this is the inherent dilemma of having a state and local governments or local school districts.
“To the extent that we have preferences, then we have to micromanage the local decision-makers, namely the school board, the superintendent, and principals.
“My general philosophy is that we should be giving more discretion to counties, to cities, and to school districts. That means if they think they can save some money by adding a few kids to a class instead of something else, then they can do that. That’s their choice.
“I have confidence that the local democracy is at least as vigorous and as responsive as our statewide democracy, even though it might be different. And I know there are a lot of people who want the people in Kern to be just the like the people in San Francisco. And therefore we create a state standard mandate prescription, and you’ve got to do it our way or the highway.
“There is another approach, and that is let a thousand flowers bloom. Let Kern County be Kernites, and let the Modocians be Modocians, and let the San Francisco school district do what they do, which is different in many cases.
“So we will have a core of civil rights and fundamental core requirements, but instead of 60 categorical programs, we want to reduce it as much as possible.”
Question: “Your trigger cuts are all the most popular programs so…”
Gov. Jerry Brown: “Is this the Washington Monument question?”
Question: “…K-12, higher ed, public safety. Some might say that’s a politically driven decision, how would you respond to that?”
Gov. Jerry Brown: “You know, I’ll tell you. I asked Ana. I said is this the Washington Monument kind of cut? And she said no. Can you explain that Ana? ‘Cause I can’t.”[Laughter]
Ana Matosantos, Director of the California Department of Finance: “Schools account for 40% of general fund expenditures. So when closing a budget, school would roughly account for 40% of expenditures if all reductions are proportional.
“The budget itself protects education. So what’s left in balancing the balance to solve the problem. Once CalWorks has been cut by $1 billion, once child care has been cut by half a billion dollars, once corrections is already reduced by $1.1 billion, these are the areas that are protected, thus these are the areas that are reduced.”
Gov. Jerry Brown: “By the way, to try to cut Medi-Cal would – didn’t even succeed this year. You got to get permission from the federal government. We get sued all the time. We’re sued just this week again on Medi-Cal cuts. So we think we’re going to get the waivers on most of them eventually. But those trigger cuts are where we thought credibly we could get the money.”
Question: “…no politics at all went into framing your initiative debate…?”
Gov. Jerry Brown: :No, these numbers emanate from the bowels of the Finance Department bureaucracy.[Laughter]
“And as those emanations float into the governor’s office, then I get them. And I asked them the very question as you’ve told me, and they said that’s where the money is.
“You know, as Willie Sutton said when asked why he robbed banks, he said, ‘That’s where the money is.’ Education is a lot where the money is. And if you don’t have money, it comes out of schools. That’s what’s been happening.
“I don’t like to see it that way. I certainly don’t like to see it come from the university. I really would like to find a way to get more money back there and cut out these tuition increases.”
Question: “Governor. Back here. Can you address to poor Californians why this budget targets them once again? You’re cutting welfare from four years to two years, cutting welfare grants for kids for $71 a month, cutting out 71,000 slots for child care. Why?”
Gov. Jerry Brown: “Because the state of California is a very generous, compassionate political jurisdiction. And when we have to reduce our spending, that spending is going to come from programs that are doing good in schools, in health care, in all the other areas that constitute public service. So obviously, that’s the only thing to cut.
“If there were more bad programs or low-value programs, we’d cut those. We can’t spend what we don’t have. And that’s the problem.
“It’s not nice. We don’t like it. But the economy and the tax statutes in California make just so much money available. And we have to spend it and make hard decisions between the university, which we’ve cut massively – $750 million. The prisons – we’re cutting back $1 billion. We’re reducing the population by 30,000 [to] 35,000 or more prisoners.
“The California government is under stress. We’re spending in real terms – that is the dollars in relationship to our wealth – what we were in the 1970s under Ronald Reagan.
“So we’re doing the best we can and it is a hardship and it is a burden and I much rather that it not happen.
“And that’s why I am proposing the half-cent sales tax temporarily and the tax on millionaires temporarily – on the high income tax earners – to try to mitigate these cuts that are even part of the budget with or without the taxes.”
Question: “…the unemployment insurance. You got it down to $417 million. Is that once again borrowing money from somebody – the disability insurance fund?”
Gov. Jerry Brown: “Yes.”
Question: “Why don’t you propose an increase in unemployment tax? That thing is $10 billion in the hole right now.”
Gov. Jerry Brown: “Well, I think it takes a two-thirds vote. I didn’t do so well on proposing a tax the last time around. So we have to figure something out whether it’s taxes or benefit changes…”
Question: “Isn’t this adding to your wall of debt?”
Gov. Jerry Brown: “That’s why I want to pay down other bricks in the wall. So I have a little more room for some of the ones that we can’t quite eliminate. I mean, this is the way it is.
“This is not like I can make the oceans go back. You cannot make the Republicans vote to increase taxes on businesses right now. I don’t think so.
“Now, if they want to come forward and tell me about that, I’m certainly welcome. I just ran into Berryhill this afternoon and he says he’s got some very expensive wine that he wants to share with me. So I will bring this point up with him.
“But my hunch is that this year borrowing will be a better way to manage our finances.”
Question: “By the same token, you also have $630 million in loan payment extensions. Is that not just exacerbate the wall of debt?”
Gov. Jerry Brown: “We’re paying down the wall of debt but we also have to make use of our borrowing capacity internally. There is no other way.
“Unless you want me to cut more kids out of child care, more mothers off of social service, or more higher tuition.
“I mean, we’re in a box in the state of California. We have more needs, desires, and demands than the money available.
“So we now have to reduce needs, reduce demands, reduce desires. Some of that will be cuts. Some of that will be borrowings. Some of that will be one-time measures. And some of that will be taxes. It’s a balance.
“This, based on my experience, is the best I can put together. The legislature will take a look at it, and if they find a better way to do it, well then they’ll make those adjustments in the budget.
“But I defy anybody in this room to make any major changes that will be any more politically palatable than the ones that I’ve made.
“I’m not saying this is perfect. I’m just saying that this is the best that our finance department and myself can come up with.
“And I certainly would welcome you, Dan, ’cause you’ve been around here longer than I have to making your columns a couple of suggestions on how we might proceed in a more politically productive way.
“So I want to get the critique and get the solution. And I promise you, if you have an idea that I can get through the legislature and I agree with it, I will implement it.”
Question: “Governor? Darrell Steinberg said yesterday that he didn’t even really want to talk about cuts until at least May to give time to see what the revenues might do – if they might continue to improve. And then even then, cuts as they last – are really the last option. Why not take that approach? And what can you say to him…?”
Gov. Jerry Brown: “Because then the cuts will have to be bigger. If we don’t make the cuts sooner, then you build up the deficit, and when you finally have to pay the piper, you have to pay more.
“I mean, the fact is government passes a lot of spending programs, and these spending programs attempt to do good whether it’s child care, education, or the university, or policing or whatever.
“Now, when you say we don’t have enough money, you got to cut some of that good, and that’s what we’re doing. We got to bite the bullet.”
Question: “Do you want some of this implemented before June?”
Gov. Jerry Brown: “Yes. I want the cuts to be…”
Question: “What do you want to be done before June?”
Gov. Jerry Brown: “I’ll let Ana say. How much do we want to get major cuts by then?”
Ana Matosantos [off-camera]: “I just have cuts, efficiencies, and other…”
Gov. Jerry Brown: “I don’t think people are going to want to do some of this, and that’s why my predecessors add even more borrowing in kicking the can. I mean, we’re doing the best we can and it’s going to be very hard.
“What I’ve laid out is going to be very hard to digest in this building. But we’re going to do our best. At the end of the day, they’re going to have to put a budget in front of me that I can sign, and that requires a certain credible disciplined program. And that’s what I’ve been pushing for between now and the time we get the budget back.”
Question: “How much sooner than June do you want those cuts to…?”
Gov. Jerry Brown: “In March. It’s all laid out in the budget when we need it.”
Question: “On that measure, March 1st for some of these cuts – that’s a very tough deadline in years past. I mean, people have said if cuts don’t happen, then we go back to plan B. What do you do? I mean, you’ve got the…”
Gov. Jerry Brown: “I’ll try my best, but this is an operation of so many Democrats and so many Republicans. And they’re co-equal branch and they decide things based on their judgment.
“But I can tell you, the best thinking from the executive branch is that this budget is a good roadmap to get us through to a solid fiscal program that we can all live with.
“Nobody’s going to like it. But if they don’t vote for it this way, they’ll have to vote for it another way. And there’s only so much modification that I’m going to be prepared to accept as the ultimate arbiter, which is my signature on the budget.”
Question: “What kind of welfare cuts do you want? Do you want actual cuts in the grants or do you want reduced eligibility? What cuts do you want to have happen?”
Gov. Jerry Brown: “We are reducing eligibility. We’re reducing child care. We reduce grants for those – we’re going to take the time limits from four years down to two years. And I think that’s about it. You can get from Ana more details on that.
“But you know, this is tough medicine. But without it, we will return to the years of obfuscation and a growing of the wall of debt, which I want to lower not increase.”
Question: “So with the pain, do you expect the public to embrace your tax initiative even more?”
Gov. Jerry Brown: “Well, I hope they will because this is all we can do. I mean, if there’s a better way we can do it, I’m totally open to it. If members of the public can show me a better path, then fine.
“After having looked at all the numbers, these are the trigger cuts, these are the cuts in the budget that I’m proposing, and these are the taxes. That’s it. I can’t figure out a better way.
“And I have to tell you there are not a lot of people around here who spends as much time thinking about government, cuts, and taxes than I have.
“And I’m not trying to kid anybody; I’m just saying this is the best I can do. But they got to agree. If they don’t agree, then we’ll deal with that when it happens.”
Question: “Governor. Upstairs the pro-tem has talked about legalizing gambling online and wants to act quick on that. Doesn’t look like there’s any revenue reflective of that in the budget. Do you think it’s feasible for 2013 or…?”
Gov. Jerry Brown: “You’re talking about online Internet poker? That’s a measure that’s being debated. I’d rather not comment on that, but I would be skeptical that there’s huge amounts of revenue in that although there certainly could be some.”
Question: “Governor, I’m curious on the trigger cuts like the biggest chunk is the higher ed and K-12. Almost as an afterthought you have wardens and park rangers and 600 some lifeguards. Why did you lump them into the trigger rather than have them cut in the regular budget?”
Gov. Jerry Brown: “Because those are more drastic cuts. We do make some cuts in the budget. These are just more drastic. Because after you make all the cuts, then you say what’s the next level of cuts in case the people don’t vote for the taxes. Because this budget is based on the assumption that the taxes pass. If the taxes fail, then we’d have to be able to immediately put in place reductions.
“These are our best judgment. If the people in the legislature can get better trigger cuts, you know, I’ll be glad to look at them. This is the best that we can figure out.
“And as you see when you get down to the smaller numbers, you could come up with others. When you get to the big ones like schools – Prop 98 – or the university, those are very hard to replace.”
Question: “It just seems like you’re really hammering on public safety there with wardens, rangers, and lifeguards. They are directly responsible for the public’s safety in these venues, and why are you going after them now?”
Gov. Jerry Brown: “Well, we were very careful about that. I think it includes lifeguards but not other public safety personnel.
“We had to look somewhere. I mean, this is the question. What other areas of the budget could we have looked at?
“We’ve already cut parks. We’ve got 70 parks closed.
“It’s not like this is all first time. We’ve been cutting, cutting for the last couple of years, and this is our best cut.
“As I say, if the legislature wants to take $1 million out of here and take another somewhere else, they can do that.
“But this is our considered judgment after weighing the pros and cons.”
Question: “Governor, your cuts to education – the ones you’ve proposed immediately and the ones in the triggers – would those go on the so-called ‘credit card’ to be paid back later or would those be actual permanent reductions in spending?”
Gov. Jerry Brown: [Permanent reductions.] “Because the money wouldn’t be there. Because if the money’s not there, the 98 guarantee goes down. So they disappear.”
Question: “So this $544 million you have in Prop 98 – that’s the lowering of the obligation from the state – that’s not a credit card situation?”
Gov. Jerry Brown: “No.”
Question: “Governor, on redevelopment, are you open to negotiating with cities to extend their life for a few more months?”
Gov. Jerry Brown: “Our position is that the [California] Supreme Court has invalidated the AB 27, and we’re left with AB 26 and that’s the way it stands.
“I know that people have concerns about economic development and housing, and I’ll be glad to hear whatever thoughts people can bring forward.
“But remember, we cut out redevelopment not because I dislike redevelopment; I don’t exactly. But we are short of money, and we’re just saying core services trump the redevelopment program. So that’s where we are.
“And if people want to add back spending they’re going to find out where do we find that substitute. Because if we have to finance redevelopment, we got to get the money from somebody. That’s the trouble.
“We’re in a box, and it’s very hard for people to look at the whole picture. People would rather look at – well let’s look at child care or let’s look at housing or redevelopment or something else.
“The fact is we have to look at the whole picture. We got so much money. We got so much spending. We got to make the two balance. We haven’t done that for years and years.
“I’m telling you we can now do it if we follow this path. It’s not a pleasant path. It’s not wine and roses. It’s very prickly path that we’re looking here, and it’s going to be very difficult to get people to vote for it.”
Question: “Governor, at the end of this budget that’s approved, how large is the workforce reduction going to be in state government?”
Gov. Jerry Brown: “Well, it’s15,000…”
Question: “15,000 and plus what’s in this year, correct?”
Gov. Jerry Brown: “I guess so…”
Ana Matosantos: “I don’t have the number right off the top. But it’s 15,000 already. It’ll be bigger because it’ll impact corrections…they’ll be thousands of positions.”
Question: “So are we getting close to the 40,000 that Whitman had talked about during the election campaign?”
Gov. Jerry Brown: “I don’t know. We’re also investing because we’re going to need people in the water and other programs.”
Ana Matosantos: “Our positions are already down. They’re going to go down some more. We’ll follow up with the specific amount.”
Gov. Jerry Brown: “Now, there’s a big difference between my opponent’s program and mine, if that’s the point of your question.”
Question: “With all the challenges facing you for this year, how would you characterize the upcoming political season for 2012? Including the presidential race, you’ve got all the initiatives out there. How would you characterize this coming season?”
Gov. Jerry Brown: “How would I characterize the political season? Exciting. Challenging. Turbulent. Unpredictable. Those would be my first cut at adjectives.
“I think it’ll be worthy of the challenge. It’s not going to be easy. It’s not going to be easy for the president. It’s not going to be easy for America. It’s not easy for California.
“One of the items, if you see, buried in the budget here that is very concerning about the demographics in California.
“The number of retirees will increase 15%. The number of children will increase – what is it? – 2%. So there’s a five times difference between the people retiring and the people coming along. And there’s a lesser gap between the people entering the workforce and the people entering the retiree population.
“So when everything else is said and done, we’re going to have to get more productive, we’re going to use technology, we’re going to have to cooperate more.
“Because a lot of people can talk about regulations or they can talk about taxes. But at the end of the day, demographics decide, and our demographics are shifting from young vigorous workers to more people like me, who should be retired but can’t give it up yet. So we’re going to have to be more productive.
“This is what’s happening in Europe. It’s happening in Japan. This is the big picture.
“And the big picture is wealth is a function of people working plus their productivity. Since we’re not going to be increasing the number of people working, we’re going to have to increase their capability through technology, through collaboration, through a better arrangement and training of the workforce. So I’d say that’s the big picture.
“And that’s why next year’s going to be very challenging, and this year is going to be very challenging.
“Thank you very much.
“Oh, I do want to say one more thing. CSAC [California State Association of Counties] voted to suspend their initiative this morning, so that’s a positive step as we winnow the field here and get ready for the November election.”
- gov.ca.gov: Video of Gov. Brown’s press briefing on the 2012-13 California state budget
- California state budget website: http://www.ebudget.ca.gov/
- WhatTheFolly.com: Transcript: Gov. Jerry Brown’s remarks on the 2012-2013 California state budget
- WhatTheFolly.com: Transcript: Press conference Q&A with Ana Matosantos on the 2012-2013 California state budget
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