Transcript: Press conference Q&A with Gov. Jerry Brown on the May revision of the 2012-13 California budget

Transcript: Press conference Q&A with Gov. Jerry Brown on the May revision of the 2012-13 California budget:

California Gov. Jerry Brown at a press conference discussing the revised 2012-13 state budget. SOURCE:

Question: “Governor, on employee compensation, can you explain how you’re going to achieve those savings? Can you do it by executive or how are you going to do it?”

Gov. Jerry Brown: “Through negotiations. We have contracts, and we’ll look at a variety of ways. The state employees particularly have come forward with some very imaginative ideas. They’ve been helpful. They’ve been willing to step up to the plate even though they represent some people who are not paid all that much. So we will work for a 5% cut and we’re going to figure it out. But that will be the financial value of the changes we make and will be mutually arrived at.”

Question: “You’ve been asking schools to effectively believe that the taxes are going to pass and not to cut back their budgets in advance. But as you know, some of the surveys have said they’re planning for the worst already which means that they could be putting cuts in place in advance. How do you deal with that and how do you tell the public we’re going to fund schools if the districts are not willing to…?”

Gov. Jerry Brown: “Well, each district deals with it in their own way because they’re different. Some have more reserves. Some didn’t spend all their federal money. Others are in more difficult straits.

“So we’ve been meeting regularly with a number of superintendents. I met just last week with the Association of School Administrators. Look, we’ll work through it the best way we can.

“Unless the legislature provides bridge funding, which they can’t do without Republican votes which are unavailable, then this is the only way we can do it.

“So we’ll work the best way we can. And if there are individual districts that have a particular problem, well, then they should let me know and we’ll see how we can work it out.”

Question: “And if I can ask – you are asking them to assume the taxes – you’re asking them to go along with you, to trust that it’ll happen?”

Gov. Jerry Brown: “I’m asking them to plan a proven budget based on their understanding of what we’re trying to do. I can’t, you know, redesign reality. It is what it is.

“You see what it is. The schools are going to be looking a lot better in the coming years if we get the taxes. And I’m counting on the voters to say yes because how much – I know voters don’t want to cut schools. I know they don’t want to cut law enforcement. And then the question is how much do they want to raise revenues? And from everything I can see, I think we have a very good chance to get there.”

Question: “Governor, we know now that the budget passed last June is billions of dollars out of whack. The budget you proposed in January is … Why should we believe these numbers any more than those numbers than you had in the past?”

Gov. Jerry Brown: “Well, I was waiting for you to ask this question because it reflects the questions you’ve been asking for the most of the time I’ve been here…”

[Audience laughter]

Question: “That’s because I’m a declinist, I guess…”

Gov. Jerry Brown: “In some ways you are a declinist…”

Question: “But are you now a declinist?”

Gov. Jerry Brown: “No, I’m a buoyant optimist…”

[Audience laughter]

“And we’re going to build high-speed rail; we’re going to complete my father’s water plan; we’re going to realign our whole prison system; we’re making some real interesting changes to schools.

“But here’s the deal. We have an uncertain economy. We had very good revenues in June. It looked like we had the money. And therefore we put the budget together in the way we did.

“I don’t just quickly jump on austerity and take pleasure in cutting jobs from schools, or health care, or anything else.

“So where we see – and this is based on what the Department of Finance people felt – a reasonable shot that we can get that $4 billion, we did. And we put it in. We didn’t get it. We took the trigger cuts. And we always have to prepare for getting less than we expect or, in some cycles, we get more. That’s the way it is.

“But the point is, it’s very easy to play gotcha! Real simple.

“But when I have to cut and people lose their jobs or a mother loses her childcare, maybe her job, I’m reluctant to do that if there’s a plausible reason why we might not have to. Now, it turned out in this case we didn’t get the money.

“But this, I think, is pretty careful projections, and they can just as easily be wrong on the upside and we could be having more money and then people coming in wanting to spend more.

“The capitalist system is not coincident with your expectations of exactitude. It doesn’t play like we may want it to. It goes up; it goes down.

“Even Jamie Dimon, who’s the guru of Wall Street, just blew $2 billion. Okay? That’s a big miss.

“So we all have to live with the uncertainties of the business cycle but we do our best. Ana [Matosantos] did her best; I did my best. I think you should give us the same benefit of a doubt that we give you. Now unless you think you’re more honest than I am or Ana is and I don’t think that’s the case. We’re all trying to do our jobs as best we can.

“And I’ve tried to not precipitously jump into more cuts but to take them only when we need them, and I’m laying out some pretty tough cuts. Ask the legislators. They’ve already made some pretty tough cuts from their point of view and from the point of view of a lot of people.

“So this is the best that I can do. I’ve been thinking about this a long time. If one of you guys can think of something better, I’ll be glad to – I’ll read your stories tomorrow, and if it passes the smell test, we might even incorporate it.”

Question: “Governor, what do you say to the critics who say that these cuts you’re targeting on – K-14 education – is a strategy to get support for your tax initiative?”

Gov. Jerry Brown: “Well, tell me where else I can find them…”

Question: “That’s your job…”

Gov. Jerry Brown: “No, I know it’s my job but you’re a citizen too and you have to vote on the initiative.

“The fact is schools are 40% of the budget, and if you look at the Proposition 98, it’s going up much faster than the rest of the budget. So when the revenue doesn’t come in and the reform in taxes is defeated, then that’s where the cuts have to come.

“And government’s doing a lot of good things. Government is a nurse, a teacher; it’s a highway patrolman, it’s someone working at a mental hospital. And when we cut, that’s what we cut.

“And there are ideologues who say government is an abstraction that you can just completely eviscerate, with no impact in the real world. Well, that isn’t true. And that’s why when we don’t get the taxes, we’re going to have bigger cuts.

“And…certainly the legislature and the Republicans, if they really want to stand up, can offer other alternatives.  Somebody can figure out a better tree to cut, be my guest.”

Question: “How much bigger are the cuts in this budget than what you proposed in January? And outside of employee compensation, can you talk a little about some of the other programs you targeted and why?”

Gov. Jerry Brown: “Well, we take it wherever we can find it with the least amount of pain.


“We took more out of Medi-Cal – the hospitals and nursing homes…”

Question: “Using all the redevelopment money for the general fund…?”

Gov. Jerry Brown: “Yeah. All the redevelopment…taking about $1.4 billion.”

Question: “Governor, on the forecasting issue. Given what just happened…[incomprehensible] if that happens again this May, this June, you see a bump, are you not going to go that route again? Are you – if the May and June revenues this year are now higher than you’ve projected in this revise, are you going to commit to not go that route again given what happened last year?”

Gov. Jerry Brown: “I don’t think the chances of a [incomprehensible] are realistic. I don’t see it happening.

“But I think what we did last year was reasonable when we did it. I want to be very cautious this year for a very important reason – that cash is going to be tight. And therefore we have to have the tightest budget we can make it. Otherwise, it could be difficult to borrow it… So we have to be tighter than we might otherwise want to be because we gotta make sure that the – it’s a financeable budget.”

Question: “Governor, can you tell us why the revenues came in that much lower…? [Inaudible] Any of the corporate changes that have been made in the past year that have been taken effect? Can you…?”

Gov. Jerry Brown: “I think it’s mostly personal income tax…”

Ana Matosantos: “It’s $2 billion in corporate tax. And the personal income is also down [Off-camera and inaudible]… Corporate tax use of credits are up, and corporate profits are down…[inaudible]”

Gov. Jerry Brown: “Remember, if you take the evisceration of the car tax and the single-sales factor, that alone is $7 billion to $8 billion. And that is a continuing drag, which this tax increase will pick up temporarily. We hope that if the economy increases, then we can level that out. But it will take continuous discipline because there will be efforts to restore it again as soon as the money…[inaudible]”

Question: “Governor, given your reliance on the RDA [redevelopment agency] money and local court reserves, aren’t you just digging a hole that’s just going to be as big the next year? You have a lot of one-time cuts…”

Gov. Jerry Brown: “Yes, we are. Because these are one-time problems.

“So, yeah, it’s not all ongoing problems. If you notice, the ongoing problem is about $8 billion…

“We can fill up – here’s the thing: you want to have ongoing cuts – they’re the toughest – and then some one-time cuts. We do both. And the real problem will be to get the one-time cuts at the level we [incomprehensible]… ask, which is half…

“So that’s the point. We give one-time cuts for one-time problems.

“I can tell you getting the ongoing cuts – they’re the most painful; there’ll be most resistance to those. Just getting half of what we want.”

Question: “Governor, is your proposal for a 40 work week include Department of Motor Vehicles? And if so, how will motorists react to that?”

Gov. Jerry Brown: “Well, we’re going to stay open later. So we’re going to work through all that. We’re listening to the employees. We’re trying to save money. There’s no easy way, if there’s an easy way.

“And by the way, thoughtful, honest people are trying to figure it out. If any other thoughtful, honest people come up with a better idea, it will be incorporated. And we’ve met with John and Darrell last night, and they’re certainly going to look through all this and come up with their thoughts.”

Question: “Can you talk about the Facebook IPO? How much do you count on it? How did you get that number and does that save us?”

Gov. Jerry Brown: “Well, who knows? That’s Wall Street, you know? If Jamie Dimon – he’s supposed to be a real smart guy – can’t know that he’s losing $2 billion, it’s kind of hard to know. So I hope Facebook brings in a lot of money. But I leave it to Ana to speculate exactly how much that will be.

“But we don’t have – this is not money in a piggy bank. It’s millions of complex transactions – buyers and sellers in a free market. What that results in and how that translates to taxes, that’s a matter of guesstimate, not current for the prediction.”

Question: “Your budget assumes an $880 million cut in CalWORKs. Upstairs in the last 4 months, you’ve heard Democratic legislators say, ‘We don’t want to cut CalWORKs. It’s the wrong time. It’s the wrong time to cut the safety net.’ What do you do to change that dynamic?”

Gov. Jerry Brown: “I think that is very difficult, but here’s the problem: What government does is good, and a lot of Democratic legislators see the good and they are really troubled by cutting back on something basic that is good. But the fact is we’re in a Democratic society. We have so much money for the people. And we got so much spending. We can have it be out of alignment for a while. But now given the decade of fiscal disconnect, I’ve committed to righting the ship of state and getting it into balance.

“What that means is that things that are good in and of themselves have got to be stopped or curtailed if we’re going to have balance. Otherwise, we borrow and sink deeper into debt, and you see Spain, Portugal, Italy, Ireland, England – they’re all having trouble.

“So while the short-term pain is real, I think the greater good is to balance the revenue with the spending, and that’s what I’m committed to doing as quickly as that becomes possible.

“But is it going to be a hard sell? Yes, it is going to be.”

Question: “Do you regret that you didn’t add more to your tax hike plan? That you didn’t seek more revenues?”

Gov. Jerry Brown: “After I see what the vote on that is then I’ll tell you.”


Question: “Well, no, seriously. If you can answer that – were there other options that you could have explored to put on the ballot?”

Gov. Jerry Brown: “As I said, this is a matter of judgment. What would the people vote for? What is fair? And then what works for the budget problems? And I came up with the answer. So could it be more? You know, then people will say it’ll be more volatile. Any way you go you have a problem. I picked something that I thought was fair, because in the last 3 decades the most affluent in California have doubled their share of the state’s income. So I think it’s fair. And two, it appears to be what the people want when you survey them. So that’s why I picked it.

“Now, could it have been more? Well, the AFT wanted more but I felt 3 is the size we ought to go.”

Question: “For the average family out there, you’re not a state worker and you’re just driving your car, work and stuff. What does this budget – how is it going to change your life with the passage with these cuts, and what’s going to change if they don’t get the taxes?”

Gov. Jerry Brown: “Well, what will change if we don’t get the taxes is schools will suffer of several weeks of – depending on how they wanted to do it. It won’t be pretty. So that’s not good for the schools. It’s not good for the universities. And then there are some other cuts as well.

“We have more spending obligations than we have revenue. I’ve bumped up the revenue on condition that people say yes. If the people say no, then we’ll have those trigger cuts and it will be felt at the U.C., it will be felt at the Cal State campuses, and it will be felt in every school district in the state. That’s where it’ll be felt.”

Question: “One of the reasons your estimate is so far off is because you’ve overestimated – the Department of Finance – overestimated the capital gains. Doesn’t your tax proposal rely even more heavily on the higher-income people? I mean, it seems like such a disconnect…”

Gov. Jerry Brown: “No, it’s not a disconnect. It’s fair because the shares of income going to those income owners have been totally disproportionate to those people that [incomprehensible] just talked about.

“The share of most Californians is shrinking as the money is redistributed upward because of a variety of factors. So I thought the tax on people making $500,000 of $1 million was fair.

“Secondly, it’s a temporary tax, and in the recovery, the progressivity of the tax will capture more of the money and help us pay down our debt and fill our budget gap. It will expire hopefully before the onset of the next recession.

“So I don’t think it’s going to be quite the same were it to be a permanent tax.”

Question: “Governor [incomprehensible]…in redevelopment…[incomprehensible], can you justify doing that? And then does that leave – does that – do you rely on the…[incomprehensible]?”

Gov. Jerry Brown: “What we do is we have one-time revenues to handle one-time budget problems.

“I think when Ana gets up here, as I think she soon will, ask her that and she’ll be more precise than I will.”

Question: “[Inaudible]…and the debt service of the bonds for housing for 2002-2006. I mean, what’s the [inaudible] between debt service on things passed a decade ago to people who are, I mean, having problems finding…[incomprehensible]?”

Gov. Jerry Brown: “Are you talking about the settlement money?”

Question: “Yeah.”

Gov. Jerry Brown: “The settlement money is going to – will really in effect replace general fund money that we can use for other things but will still be going for the purposes that the lawsuit intended…”

Ana Matosantos: “…There are housing programs that helps…[inaudible]”

Question: “I mean but those were passed a long time ago…”

Gov. Jerry Brown: “Look, we have to – the budget has hundreds of funds. We have lots of restraints and rules and figuring out is not just showing up and say, ‘We got an $8 billion gap, let’s start cutting like nobody’s business.’ It’s a pretzel palace of incredible complexity, and that’s why it isn’t straightforward how you balance the budget. And we do the best we can, and the people doing it are not playing games, are not playing tricks; they’re just trying to get it done. And I’m trying to put it all together and persuade the voters that we ought to get some more revenues.”

Question: “…show the taxpayers all these numbers and it might not get through to them. And I’m wondering if they might want to be see some reforms out of the state capitol, whether it’s teacher accountability or public pensions. How do you go about trying…?”

Gov. Jerry Brown: “…A very important and I will be pushing them. I am pushing them this year, but everything has to go in sequence. Right now, we’re asking for some painful cuts. And if we get the painful cuts, we’ll bring up some painful pension reforms.”

Question: “Governor, your tax measure – the re-written tax measure is much bigger than the one – a couple of billion dollars bigger than the one in January. Why haven’t the triggers grown commensurate with the growth in the tax?”

Gov. Jerry Brown: “They have grown…”

Question: “But only a couple of hundred millions though. They were like $5.4 billion and they’re now like $6 billion.”

Ana Matosantos: “I mean, the general fund benefit from the tax measure is $5.6 [billion]…[inaudible]”

Question: “It’s $5.6 [billion]. The one in January was $6.9, right?”

Ana Matosantos: “Well, that wasn’t…”

Gov. Jerry Brown: “All right, I’m going to have…[incomprehensible]…Even though this is my 12th year doing this, it’s still complicated.”

Question: “Can you answer one more question about the complexity? Spending reductions have not happened in the way that you had hoped would happen.”

Gov. Jerry Brown: “But it did happen beyond anything anyone would have expected…”

Question: “A part of what was budgeted to be reduced has not been reduced…”

Gov. Jerry Brown: “Right.”

Question: “I wonder if you could speak broadly of your experience through the years how difficult it is to actually get the spending down even the budget says cut it and it doesn’t happen?”

Gov. Jerry Brown: “Very difficult. Because takeaways are never  pleasant. I mean, take a look at what’s going on in Greece. Take a look at the 100,000 people marching in Spain. Once you have it, it’s much more painful to give it up than if you don’t get what you desire. And that’s why it becomes very important to block new spending proposals. It is difficult and that’s just life. It’s called the cliff effect. We push you off and nobody likes falling.”

Question: “What’s in your budget for high-speed rail and how are you planning on spending the cap and trade money?”

Gov. Jerry Brown: “That’s an open question. That’s still being worked through. There is nothing in the budget for the bond…

“And we’re asking the federal government to front load their federal funds…to keep things [incomprehensible]. That’s what we’re hoping for.”

Question: “…[inaudible] Do you think it’s going to hinder ability to operate as a [incomprehensible] branch? And…?”

Gov. Jerry Brown: “What’s that the courts?”

Question: “Yes.”

Gov. Jerry Brown: “Well, this is the problem. Money is not in a piggy bank. It comes from the people, and the people are sometimes more successful than at other times in terms of their businesses and their incomes. So when the money’s not there, government has to cut back or you’ve got to borrow or kick the can down the road. We are trying to straighten our fiscal balance sheet. We’re looking to courts. We’re delaying their construction, we’re sweeping their reserves, and just like everybody else, they are not – nothing in government is a absolute unconditioned good. Every good is relative to all the other good and in the context of what’s available. So we make the best judgment that we can, and as the courts make their arguments, the legislature will listen. And they’ll weigh that against childcare, they’ll weigh that against CalWORKs, they’ll weigh that against a lot of things. And we’ll come up with a budget on June 15th.

“But it’s just the way it is. We’ve got to 3 branches of government, and they’re going to have some of their branches trimmed.”

Question: “You talked about the pain that people feel if the taxes aren’t passed. But could you make a more definitive statement about pain that they will face even if they do pass. I mean, the cuts that you’re making ahead of time.”

Gov. Jerry Brown: “Right, well, they’re pretty serious. The cuts are in Medi-Cal, nursing homes, and hospitals, CalWORKs, childcare; this is all employees 5% cutbacks. This is all real. But the fact is California has been living beyond its means. United States of America and its federal government is living beyond its means. A lot of corporations have. A lot of people. They spend more than they take in. Well, there has to be a balance and a day of reckoning. This is a type of day of reckoning, and we’ve got to take the medicine. That’s my recommendation. We’ll see what the legislature does, and I’ll have a chance to react, and the people will win.”

Question: “…and the support from Democrats for his plan?”

Gov. Jerry Brown: “How will I – what’s your question?”

Question: “How do you expect for the budget negotiation – what are your strategies?”

Gov. Jerry Brown: “I expect it to be difficult. Difficult and – I don’t know what the right adjective is. But I’d say challenging. I don’t want to say any more than that.

“I mean, we had a very amicable discussion last night but no details were really brought to bear.

“I think it will be – there will be some tense moments before we finally get this matter resolved.”

Question: “Governor, the Speaker has the bill to eliminate that loophole for single-sales. He wants to use the money for middle-class scholarships. If you get that bill, will you sign it?”

Gov. Jerry Brown: “Sure, yeah, if I get the bill I’ll sign it…”

Question: “Why doesn’t that violate your pledge to go to the voters for tax?”

Gov. Jerry Brown: “Because it’s a – Is that a trap? That’s a [incomprehensible]! That’s not quite an inquiry that we are all committed to.

“I thought of that. I’m not going to A – it’s probably going to be difficult to get it to me. So it’s a little bit hypothetical but I probably shouldn’t have jumped so quickly and say I’ll answer that question when I get it. So you won’t have your – whatever you’re trying to get.

[Audience laughter]

“But, if you want a little reasoning here, single-sales factor is a methodology of assessing what is a previously existing corporate tax. It’s not a new tax. It’s a way of calculating the tax. And in most states – in fact, all of them – where they have a corporate tax, the choice of method is mandatory. During the budget negotiations, the Republicans got or hammered through some of these optional for corporations only. We as individuals can’t choose between two methods of how to calculate our tax. We only got one method. And so I think changing this, which is an obvious loophole – a dumb idea to begin with – I think it equitable, it’s logical, and I would say, in every sense of the word, it’s a changing of how corporations calculate their tax in a way that brings things into line –  I think it’s certainly consistent with what I believe and what I promised in my campaign.”

Question: [inaudible]

Gov. Jerry Brown: “I think I’m not going any further on these tax methodologies. I think we’ve had enough for one press conference.”

Question: “…November ballot more complicated?”

Gov. Jerry Brown: “Very complicated. I find…”

Question: “More complicated that it would have been? Could you have done more?”

Gov. Jerry Brown: “Could I have done more?”

Question: “To get the others off the ballot.”

Gov. Jerry Brown: “You tell me what it would be. You know, there are people who have the resources. They can enter into the ballot business of California and that’s what they’re doing.”



Learn More: