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

Edited by Jenny Jiang

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

Question: [Inaudible]…protected a $1.9 billion deficit. Would you be able to explain what your budget assumes differently from the…?

Gov. Jerry Brown: Yeah, I could but I’d rather let Ana [Matosantos] do that.

Question: [Inaudible]…what your priorities are for the health care special session? What are the legislations are you specifically looking for? What are your…?

Gov. Jerry Brown: You know, we have Diane in here for that.


Question: So do any of these numbers reflect the fact that we still owe about $40 billion to the federal government for unemployment checks that…?

Gov. Jerry Brown: No, $10 billion.

[Overlapping audio]

Question: Is that reflected there?

Gov. Jerry Brown:  That’s not in our wall of debt, is it? We’re paying it off. We’re paying $300 million. We’re bound. So yeah, that’s the problem. You can add it there if you want to but that’s a long-term indebtedness. We can pay it by a certain amount. At some point, the federal government says you have to raise the employer taxes. We don’t like to do that when the economy is shaky but we’ll manage our unemployment insurance fund.

Now, remember, when people are out of work, we have something called the stabilizer. The unemployment insurance kicks in and people get money even when they’re not working. That money keeps the economy going at a higher rate than it would if we didn’t have it. So that borrowing – lent to us by the federal government – is a good thing; it kept things from getting worse.

Now, we pay it back but we’ll pay it back over time and I think we can handle it.

Question: Let me try a broader approach to the first question you got which was about…

Gov. Jerry Brown: Are you being critical of your colleague?

Question: Not at all. But I want to – never. But I want to point out that your predecessor at one point declared the deficit gone a few years ago…Gone, similar to what you’re proposing today. And I want to know – that didn’t turn out to be true – how do you convince the public that these numbers are balanced? That the deficit is truly gone? That’s effectively what you’re saying in the topline here – the deficit’s gone.

Gov. Jerry Brown: The deficit’s gone; wall of debt remains. So we’ve got to keep our eyes clear here. Well, the difference is we’ve cut massively – we cut 25% out of the colleges and universities. We owed $10 or $11 billion. We borrowed through deferrals through our schools. We cut health care. We cut aids to the blind and disabled, families on CalWorks. We got rid of redevelopment. We got rid of the Williamson Act…for open space land. You name it. We did things that were never done before. Plus we have the new taxes for seven years and we have the proposition that brought back $1 billion in the so-called single sales factor. So we’re in a better place.

Now, why didn’t it always go down? Because everybody gets exuberant because the money and they put – they show need. “This is need. This is right. How can you not spend it?” And it’s very hard to say no, and that’s basically would be my job. That’s what – if you know what a governor is, a governor on a machine – when a machine tries to exceed a certain speed, the governor then depresses the speed. So that is the metaphor for 2013.

Question: [Inaudible] …so volatile. How can you be so confident in these numbers you’re projecting? I mean, we just had a fiscal cliff discussion where we’re talking potential recession…?

[Overlapping audio]

Gov. Jerry Brown: You’re talking about confidence in numbers, but you are very confident that the federal government is going to give us all the money that they promised. And I’m the one who said, “Hey, we can lose maybe billions of dollars if things go awry in the federal government.” So yeah, we don’t know going forward. But we do know paying down debt and building up a reserve is a way to go. Now, paying down debt is a form of reserve because you don’t have these debts then when things go bad you can borrow some of that money back in the same way. So by paying down the debt, we put ourselves in a stronger position when things go bad as they inevitably do.

The other thing you do is don’t spend too much money – keep the brakes on. And that’s something that’s very hard to implement because all the groups are paid. A lot of people paying dues to their trade associations, their organizations, and they’re expected to deliver and what they want to deliver is spending that we don’t have the money for. And I accept and embrace my role of saying no. I will say no because California is saying yes in a very progressive way on many, many different levels and we’re saying yes to education.

And that’s the other point I want to make: Yes, there’s inequality out there, yes there’s hardship. But I want to take the money that we do have and put it into our schools and our colleges and to help people help themselves get that – not a fish but a fishing rod. And that’s investing in education and that is the social program that I think will give us the biggest return on our investment.

Question: You talk about keeping the brakes on and, you know, keeping the special interests from spending. But how are you going to have that conversation with lawmakers who could potentially override you?

Gov. Jerry Brown: Well, that will require a lot of – a lot of charm.


Question: [Inaudible]…Now, your weighted student formula…

Gov. Jerry Brown: Well, we don’t call it that anymore.

Question: …those local flexibility…whatever the terminology is today but how is it different from last year and how are you going to sell this to suburban school districts who feel that they’re the ones who get the short end of the stick here?

Gov. Jerry Brown: Because our future depends on it. If we don’t invest adequate funds in our children and in their education, we will not have the economic well-being in future years. This is an aging society. It’s serious. And the inequality is growing. We have to do what we can to offset the global factors. One of the most important ways we do that is to invest in schools and invest disproportionately in those schools where there’s greater difficulty in learning.

And certainly, when you look at a classroom in Piedmont and you look at one in Compton, it’s a lot different. The families have far more money, far more access to better things in life. And to the extent we can offset that by putting more funding into those school districts, we’re going to do that.

And I think people will come – I think the majority of people are going to see that and it’s our future. So maybe some suburbanites might not see it but the ones who can see over the horizon and realize that an aging group of people have a vested interest in making sure that the generation coming along is going to pay their Social Security and maybe operating their nursing home when they’re sitting there drooling, now they want to make sure that they’re making enough money that the social harmony is maximized rather than minimized. And social disharmony is a real option here. And I think that’s the whole essence of a progressive agenda to try to compensate for the global inequalities that are growing.

Question: [Inaudible]…Do you budget for any increases in state worker costs or are you going to try to keep their salaries right where they are right now?

Gov. Jerry Brown: Well, that’s a collective bargaining strategy and even though we had to put all that stuff in the budget, we approach it carefully. Because remember, there’s a guy name Colonel [name incomprehensible] who you may not know. A doctrine was developed under a practice he tried to exercise…and that is you try to tell the employees, “I know it’s right. I thought about it. Here’s what you can get.” Collective bargaining doesn’t allow that. Collective bargaining means you’ve got to meet in good faith. Listen to the other side and you go back and forth. So we have to enter those negotiations with an open mind but we have to live within our means. So I don’t want to put too many of my cards on the table although everything’s in the budget so you can figure out kind of what the outside parameters are.

Question: [Inaudible]…cap and trade money and how are you going to spend it?

Gov. Jerry Brown: It’s in the budget there. It’s a few hundred million this year, a few hundred million next year.

Question: What are you spending it on?

Gov. Jerry Brown: Let Ana answer it.

[Overlapping audio]

We’re being very careful. I don’t make any – I don’t have any illusions about the future. There’s a lot of uncertainties but I am proud of the fact that California is leading the way in dealing with climate change.

And so how much comes in in cap and trade relative to the total overall budget it’s a very tiny amount. What’s important is is that we’re dealing with climate change because there’s three big facts – well I mean there’s four.

Climate change is going to alter the conditions. It already is. Forest fires, fire season, rising sea level. We saw on the East Coast. Big problem. It means real money. That’s another risk here, put that on the wall of debt.

Second, we got this inequality.

Thirdly, we have the aging of the population. We have to deal with all this stuff so that means we’ve got to be very careful on how we spend our funds and generate the wealth that will allow us to proceed.

Question: [Inaudible]…about how this is going to impact tuition. Can you guarantee there will not be tuition increases?

Gov. Jerry Brown: Look, guarantees is not part of this world that we live in. But I’ll be at the [UC] Regent’s meeting next week; I’ll be at Cal State the following week to discuss the budget issues. We’re telling them that they can – and the phrase is – deploy your teaching resources more effectively…There’s many way you can do it. There’s online teaching, more time in the classroom, re-focusing on the emphases. But the point is we want more kids to be able to get through school quicker without pushing up costs in the historic way that we have.

[Overlapping audio]

Question: …to actually control how UC and CSU spend their money? And what are you going to do in terms of using the bully pulpit to try to…?

Gov. Jerry Brown: I’m working with the two groups. I’m going to the meetings. I am President of the Regents. I’m going to exercise that responsibility and I’m going to work with the other regents and trustees and meetings with professors and administrators, faculty representatives, and I’ll take this as far as I can. But there are – there is a certain way of higher education – it’s often described in the word quality, which is very abstract, and it’s nationwide. And if you look at it, it grows in costs at twice the cost of living. So if our budget is going to grow at 5% but the university wants us to give them 10% or 11% every year, there’s a gap and that gap cannot be met by tuition. At least not – we have to narrow that as much as possible. And therefore, the people in the university are going to have to find a way to do the same thing with fewer growing resources than they’re historically used to.

Question: …as far as movement in that direction, you were at the Regent’s meeting in November and the Trustee’s meeting in November. Any movement in that direction yet?

Gov. Jerry Brown: I would say the discussion is still embryonic. We haven’t totally clarified what’s at stake here and what has to be done. So I want to move diplomatically but carefully. The last time we [had] the Regent’s meeting, it didn’t turn out to be as productive as I would have liked. So this time, I’m going to be listening a lot, meeting behind the scenes and figure out can we turn down this relentless increase in spending that is so much higher than the normal cost of living. So everybody’s going to have to pull together – administrators, the leadership, professors and the rest of them.

Question: [Inaudible]…more funding to those programs that have previously been cut?

Gov. Jerry Brown: What I say is that fiscal discipline is not the enemy of democratic governance but rather its fundamental predicate. And I’m going to tell them that fiscal discipline – balance – allows us to take care of the needs of the people over time instead of just having a momentary rash of excitement then we pay with a hangover several years later. And I am juxtaposing somewhat of an abstraction against the immediate pressures but that will be my challenge for this year.

Question: How can you make sure that the money goes to the most needy children?

Gov. Jerry Brown: It will go to the students most in need because the formula will direct more funding over the next few years based on the number of students who do not speak English as their first language and are not fluent, the number of children in low-income families, the number of children in foster care – all that will be part of a formula that will direct money where it’s most needed. And this really is a classic case of justice to unequals we have to give more to approach equality. And that’s the principle – I think it’s a powerful principle, and I think the legislature will respond even though there will be a lot of debate back and forth.

Question: Part of more local control for schools would be to allow schools to have more control over their own revenue, allow them to raise taxes and reduce threshold of passage. What’s your view on that?

Gov. Jerry Brown: I’m not prepared to opine on that aspect of subsidiarity, but you are right – you’re raising a point of control and what are all the aspects of control. But I’m not – I’m not going to go there in January. And I’m also mindful of the fact that we just had a tax measure and there’s a lot of exuberance to find more and more ways of taking in more government revenue. Well, the fact is California is not bashful in collecting public revenue or raising funds, so I want to be careful, but certainly we’re going to have a lot of discussions on that topic over the next couple of years.

Question: [Inaudible]…2013 the year of fiscal constraint or fiscal restraint. Can you just sum up generally how this budget reflects that sentiment, if indeed it does?

Gov. Jerry Brown: Well, it maintains the cuts that were made in the past few years. It selects where to put the emphasis to get the biggest bang for our buck – namely, schools; namely, schools that have the greatest need; and to our universities to emphasize teaching and learning on the part of our undergraduate students; and in terms of health care, moving cautiously, offering two pathways, envisioning a very intensive discussion about how to actually implement this Medi-Cal expansion that is called for by the President.

Question: So you’re considering a statewide program or 58 separate county programs? Is that what you’re saying you’re…?

Gov. Jerry Brown: Something a little bit like that.

Question: How is that efficient if you have 58 different…?

Gov. Jerry Brown: That’s what you have to talk to Diane over here. I’ve got my experts standing by.

Question: Just to follow up on the Medi-Cal – is California committing to that?

Gov. Jerry Brown: Yeah. We’re committing but we’re committing given the promises that are being made to us being realized and working it out in a sustainable, thoughtful way so we don’t find ourselves in a big hole in a couple of years.

Question: Are you still waiting to make that decision?

Gov. Jerry Brown: Well, I’m going to defer that to – these are complex topics. These are little above my paygrade.

[Overlapping audio]

Question: I’m from Orange County…

Gov. Jerry Brown: I don’t know if there’s any hope for your readership…

Question: They’re going to look at you saying it’s an austere budget and a 5% increase in spending. How do you respond to that?

Gov. Jerry Brown: Well, there’s a 5% increase in the wealth. And if you go to…Schedule 6 in the back and you take a look at the number of employees in relationship to the number of people living in California, it’s lower than it’s been historically. Lower than when I was governor. If you look to the spending in the general fund, it’s lower going all the way back to Reagan. If you look at the overall spending, it’s lower than going back 10 or 15 years. In fact, there were a few years when I was there that was even higher 30 years ago.

Now, you have to be careful when you look at that because a lot of things have happened in the meantime. But basically, relative to our wealth, we’re investing at a very similar level to what it’s been historically in California.

And I also want to say something that there is this doctrine that government is the problem. Well, government has problems – maybe not as great as newspapers but it does have problems – and we’ll deal with those. But government is still the means by which a free people act together – act in concert. We have to act through some mechanism. We have local government, we have state government, we have the national government. This is a good thing, and there is no freedom without a vigorous, honest, and transparent government. And so just hacking away at government is more ideology than it is consistent with what the American tradition is.

So whether it’s the Weekly Standard or Orange County Register or whoever these people are, there’s a doctrine. And I know on the other side there’s a doctrine – The Nation, Mother Jones, and all those.

But when you slice all that ideology out, we do have to invest. We do have to spend some money and that’s what we’re doing. But I’m going to try to spend it wisely.

Question: Governor, you talked a little while ago about the dangers from Washington of the budget and the fiscal cliff negotiations that are ongoing. Can you talk, though, in broad terms about how dangerous to the precarious balance you’ve laid out?

Gov. Jerry Brown: [Inaudible]… I noticed in the paper a few weeks ago that Obama had said we might have to cut $400 billion out of health care. Well, that was $400 billion over 10 years. So I figured $400 billion over 10 years, that’s $40 billion a year. And if it’s $40 billion a year in California – it’s 10%, probably 12% of $40 billion is $4.8 billion. Now, maybe that’s Medicare, maybe that’s Medi-Cal, maybe it’s something else, but I just said rough numbers. If you’re going to cut $40 billion a year, our share of that could be 10%. So that’s the order of the magnitude. Probably not going to be $4 billion, maybe something else. They probably won’t cut that much anyway. So the good news in the short term is they’ll probably blink. But if they ever did get religion and start balancing their budget, we could be in deep trouble – in the short term.

Question: In some sense, you’re actually advocating for them to blink – to kick the can down the road.

Gov. Jerry Brown: No, I’m advocating that fiscal discipline is the fundamental predicate of democratic government…

Question: …On the corrections side, how much are you counting on saving by turning back the federal courts, getting rid of the…?

Gov. Jerry Brown: Good, here’s the point I want to make. I’m glad that you asked me that question. The numbers I’m seeing is that the cost of medical care in California is three times the cost of medical care on average throughout the prisons of America. We’re spending three times more. So it’s clear to me and it’s clear to our experts that we’re providing more than what the Constitution requires.

Because of that, we’re taking money from other places and some of the places we’re taking it is not just education but in the prisons themselves – rehabilitation, drug treatment, re-entry programs, education, and things like that.

So the courts, paradoxically, by protecting the right to ever-expanding health care are also siphoning money that could go – and I would tell you would go as long as I’m governor – to preparing inmates to return to society and stay there with greater probability, and that’s what I’m seeking.

So I would say to the extent that we can save money by terminating the consent decrees and the masters will put that money into improving the situation for our prisoners so they can learn more, they can deal with their substance abuse problems and we can get them ready and supervise them once they leave.

Question: [Inaudible]…Republicans are now [incomprehensible audio] fiscal discipline. Democrats are starting to criticize. Does that put you kind of on the wrong side…?

Gov. Jerry Brown: No, just requires a level of dexterity that I’ve been known to deploy in former years…


…No just what are you supposed to do here? And also we’ve got the cuts. We have to keep the cuts – we have the money. So I’m here with pen and I will sign or not sign depending on what it is. But before we get to that point, I’m going to spend a lot of time with the legislative leadership and with the legislators and the groups that tend to pressure them and see if I can’t get everybody on board. That’s what it is.

America is over-committed. It’s a big mess in Washington. I see California not as the failed state that those characters…have basically written off California as a failed state. And yes, we’ve got some problem but I see the challenge is demonstrating California how to deal with the complexity.

The challenge is we’re an aging society – productivity is growing more slowly. To the extent that it grows, it’s not going to the workers; it’s going to the owners of capital. And we’ve got to deal with climate change, which is going to make everything more expensive. We’re dealing with – and I realize it’s hard – the Democrats want to do one thing, Republicans want to do another – and I’m in a fairly strategic position to make things work.

So I would like – at this stage in my life – to do something that would make California a leader and an example of what America has to do and that is both fiscal discipline and imaginative investment in our technology and society, the environment and all of that. So it’s not just one thing – it’s many things. And I think California – that’ll be the test now. It’s a lot but I’m saying California could be a model and to do that we’ve got to keep Republicans and Democrats on a playing field that gets us to the end.



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3 Comments on “Transcript: Gov. Jerry Brown’s press conference Q&A on the 2013-2014 California state budget

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