Transcript: Gov. Jerry Brown’s press conference on the 2013-2014 California state budget

Edited by Jenny Jiang

Partial transcript of Governor Jerry Brown’s press conference remarks on the 2013-2014 California state budget on Jan. 10, 2013: 

I want to discuss these charts because they say it all. California came through probably 15 years of great fiscal difficulty – some of it by overspending, some of it by tax reductions that we really couldn’t afford, and a lot of it by the Great Recession.

But the result over here – as you can see these are the budget deficits – red, red ink. Then you go back over here and see where we are. Now, those are billions; these are millions even though the lines look similar.

But right now, for the next four years, we’re talking about a balanced budget; we’re talking about living within our means. This is – this is new. This is a breakthrough.

So now, as we say that, that doesn’t mean we’re in the clear.

Now, here are the budget lists, actions on the federal deficit. Will the federal government keep borrowing 40 cents on the dollar? Will they keep borrowing from China? Will they print money out of thin air? Or will they start making cuts?

And when they make cuts, those cuts fall downhill right to the state, and therefore when they deal with the “cliff” or the growing trillions of dollars of federal debt, that can affect California. Is it $100 million? Is it a few billion? Only time will tell but it is best to maintain a very solid budget and a good reserve. Otherwise, we’ll get hit and we’ll go back to the boom and bust, borrow and spend, and that’s what that is.

And I’m determined to avoid the fiscal mess that the last few Governors had to deal with. And the only way you avoid it is by holding the line, by exercising a common sense approach to how we spend our money.

Now, second risk: uncertain economic recovery. What’s going to happen? They say that new taxes or cuts can affect the economy, what happens in Europe. That’s another uncertainty.

Federal government and courts blocking budget actions. We’ve made cuts, that Schwarzenegger made cuts – some of them were blocked in court, some of them we just got permission to implement several years later.

So there’s lots of action by the federal government that denies us waivers that we need to make cuts or court action, and we’re in the 9th circuit, which is never hesitant to jump into our affairs.

Potential increase in health care costs. Now, that’s a whole another one. We’re taking over the health care – the Affordable Health Care. We’re expanding to Medi-Cal, opening up a health exchange. How much is that going to cost? When you add a million people or more to the Medi-Cal system, as is envisioned under the Obama health care plan, then you put pressure on provider rates. Because we pay relatively low rates and now we’re going to load up the system with more demand, just simple economics tells us that pushes up rates. So that is something we’ve got to keep in mind.

Now let me – I’ve got a couple of other charts here.

So now, what are we going to do with the money that we have? We’ve achieved the position we’re in because of tough cuts – cuts Democrats didn’t like to make but they did – and then the people voted for taxes.

By the way, the cuts are about three times more than the taxes. But it’s highly significant that we broke the log jam by going to the people because we do still have government by the people as well as for the people.

So there’s what education looks like. It’s going up – from a low of $47 [billion] to $66 billion. Significant increases. This is the amount of funding that will happen in K-12 – $2,681 per student. The community colleges $1,900. California State University $2,000. University [of California] $2,492.

So this is real investment. Now, when I say that, it’s not just the money that’s going in but it’s going in under new conditions. We’re investing in our schools. We’re doing so in the context of encouraging local flexibility, local control.

We want to put the decisions closer to the classroom, and I use the term subsidiarity and that means let problems be solved closest to where they exist. Those institutions that have the most direct contact with the situation, with a problem, shall have the greatest authority.

So the teacher in the classroom obviously has the maximum authority, then the principal, then the superintendent locally, school board, then the state board, the state’s superintendent, the legislature and then the federal department of education.

As you go up the line, you lose control and you build bureaucracy and unending oversight. So that’s why we want to put the money into local schools but create greater control.

Now the way we create greater control is we eliminate most of the categorical programs because they are built on bureaucracy, on auditing, on non-teachers being increasingly hired to manage the various complicated flows of money.

So now – that’s local control. But secondly, why do we have all these categorical problems? Because people come up – people see their problems and their own problems in California. We have a – students – it’s a – it’s like 40% of the students are poor, are low-income families, over 20% don’t speak English as their first language and are challenged with speaking English fluently.

So that means, our future depends not on across-the-board funding but in disproportionately funding those schools that have disproportionate challenges. Now, we know from fact – Greek philosophy – Aristotle said, “Treating unequals equally is not justice.” And people are in different situations. Growing up in Compton or RIchmond is not like it is to grow up in Los Gatos or Beverly Hills or Piedmont.

So we recognize that and we put in this an equitable formula without bureaucracy, without all the categorical maneuvers and complexity. We send the money based on a formula, and that is controversial but it is fair; it’s right and it’s just. So that’s that on the K-12.

On the higher education, we’re asking the teaching resources be deployed more effectively. We are adding money to the University [of California] and to Cal State but the schools – the colleges – they say they need more money. Well, the gap between what we’re going to give them and what they say they currently need will be made up with increasing tuition – endless tuition increases.

The only way to stop that is for the colleges and universities to reconfigure themselves that they are more effective and they’re able to do excellent work but do it in a way that will not keep the costs escalating at more than two times the cost of living. So that’s going to be a challenge for the university. I understand that.

I’m very committed to seeing the University of California be and remain a great school. My mother went there; I went there. Of course, we went there when there was no tuition and I’ve seen it rise. I want to do everything I can to keep the University affordable both to the state and to the students.


Oh one more thing and that is the health care. We have a very complex challenge facing us with the Affordable Care Act. We are going along with the program. We’re going to implement the health care – the federal health care – but we’re going to move cautiously. We’re going to work with the counties. We’re going to work with the legislature.

We’re offering up two options – one that would be county-based, one that would be state-based. We’re committed to expanding Medi-Cal – we’re committed to bringing more people into the health care system.

But we recognize there are big costs out there. There are big unknowns. So we’re going to move carefully but we’re going to move with commitment because I believe that people do need a decent health care and I think what President Obama did was historic; it was heroic. And I’m going to do everything I can to be a good partner in making sure his plan works.

The last thing, of course, is this wall of debt. It’s still $34 billion at the end of 2012-2013. We think by the end of 2016 we can get it down to $4.3 [billion].

Now, everybody’s going to want to say we’ve got these programs and all the different social service programs, particularly what Democrats like so much, highlight.

And I’m very aware of the driver – the driver is the fact that in America the fruits of our prosperity each year have been disproportionately channeled to capital and away from our labor, and this is causing this tremendous growth in inequality. That’s why if you look at the top 1% they’re at 22% of our state income and they used to be at 10% 30 years ago.

So we have more middle-class hollowed out. You’ve got people at the bottom and slightly above the bottom. They’re struggling, and we want to find out how to compensate for that. And that’s all good and there’ll be lots of bills on how to do that.

But California’s already far out in front. When it comes to CalWorks, we’re spending more than any other state and that’s good and I support that. But we have to live within the means we have. Otherwise, we get to that situation where we get red ink and then we go back to cuts.

So I want to avoid the boom and the bust, the borrow and the spend, when we make the promise and then we take it back. We say retire at 50 at 3% and then we got to take it back. We say you have all this childcare and then we got to pull it back. That kind of yo-yo kind of political economy is not good.

So I want to advance the progressive agenda but consistent with the amount of money people made available.

And I went up and down this state promising that we would be good stewards of the people’s money and would they please add to it by the tax measure. They voted for the tax measure. We’re putting the money into the schools as I said.

But we’re also not going to play the game of spending money we don’t have and then after I’m gone somebody else comes along and has to face what I did – a $27 billion or a $20 billion deficit.

So that’s the context of this budget – it’s to fix a longstanding problem. We have fixed it. We’re on the road to a sustainable balance. It will not be easy. There will be some disagreements. There’ll be some heartburn.

But I’m here to get done what I think is compassionate, what is good for the state of California, and what we can maintain over time instead of just enjoying a momentary high and then having a hangover many years later.



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