Transcript: Press briefing Q&A on an agreement for the 2013-14 California state budget

Transcript of press briefing Q&A with California Assembly Speaker John Perez (D-Los Angeles), Senate Pro Tem Darrell Steinberg (D-Sacramento), and Gov. Jerry Brown on an agreement for the 2013-14 state budget on June 11, 2013:

Question: [Inaudible]

CA Assembly Speaker John Perez (D-Los Angeles):
…The whole idea is to make the most rational decisions that you have with the resources that you have. So when you look at the phase-in of middle-class scholarships, it makes absolute sense to ramp up the money because we’re past the point in time where people could have used the benefit for the next academic year.

So in the first phase, we build the infrastructure for the applications for the next academic year and we see the ramp-up go forward.

Now, why does the phase-in continue to go over into the outlying years? Because we expect it to go along with an increased recovery of the state. We’re at the beginning point of the recovery. We expect to see for California not the pinnacle. So we ramp up our re-investment as we ramp up our recovery.

CA Senate President Pro Tem Darrell Steinberg (D-Sacramento):
I agree with – you know, it’s always balance as well. And balancing ensuring fiscal stability and making these targeted re-investments.

I would say, for dental though as an example, this program has been defunct for 4 years, and it’s going to take maybe that long – certainly a number of months – to bring the program back. So beginning in the Spring of 2014 is as quick as we would probably be able to get it going anyways and we save that money by not budgeting for it until it is actually ready to commence again.

Question: [Inaudible]

CA Gov. Jerry Brown:
Well, we’re in a slower recovery than has historically been the case, and therefore we’re tempering the spending to the flow of the new funding. Also, when you present a new program, you don’t want to throw it out too fast because then you make mistakes. So it’s more efficient. It’s slower in terms of the spending, and that’s what we try to project. Make the money last as long as possible.

Question: [Inaudible]

CA Gov. Jerry Brown:
No…look, we have boom and bust. Money comes in, money goes out. And I’m trying to be a good, prudent steward of the people’s money. And as far as these projections – as the LAO makes their sincere projections – Ana [Matosantos] assures me that her people make a professional judgment. They happen to be different. Only time will tell. But in general, I think prudence rather than exuberance should be the order of the day.

CA Assembly Speaker John Perez (D-Los Angeles):
And if we could, John, when you look at the difference between the different revenue projections and the forecast period, we’re talking about a percentage point difference between the most conservative and the most optimistic projections.

And so all three of us have been very mindful of being very disciplined with new revenues. And that’s why you see, for example, in our blueprint the idea of using the volatility in the smartest way possible – using that for one-time purposes, using that to build reserves, using it to pay down debt, using it to build a rainy day fund.

The notion that cash flow and ongoing revenues are the same is really a flawed notion.

And so the three of us combined have this notion of being very disciplined with the resources as they come in and building for long-term recovery and not repeating the cycle of boom and bust and mistakes of the past.

CA Senate President Pro Tem Darrell Steinberg (D-Sacramento):
Who, who wants to go back to 2009 or 2011? Nobody. And by agreeing to the finance revenue, it’s actually the best of all worlds. We’re able to accommodate our priorities by compromising, and at the same time, if there is additional revenue, we can either pay down debt more aggressively or look for other targeted investments to try to again make up for some of what has been lost over the last 4 or 5 years.

So the conservative revenue estimate while accommodating the priorities we laid down in our budget, I think, is actually a very good thing.

Question: [Inaudible]

CA Gov. Jerry Brown:
Look, we have a budget now. We don’t get another one for a year. So [laughter] let’s take it one step at a time…

Well, it’s paying – we’re still looking for, I think, paying it down to about $5 billion by 2016 or [20]17. So we’re on track and I think the decisions were made.

Getting a budget is a matter of taking my ideas, listening to the Senate, listening to the Assembly and working together in a way that comes up with a budget.

I do want to add one more point. We do have the enterprise zones still out in front of us. I know they’ve supported strip clubs and other things of questionable provenance, so I’m hoping that we have a chance to transfer that into a manufacturing sales tax exemption so we can do a little more to attract manufacturing. I just want to put that out because even though we’ve got a lot, there’s always one more and this is one more that I’m going to work very hard on.

Question: [Inaudible]

CA Gov. Jerry Brown:
Well, it’s part of the work that is before us…Well, it’s wherever it could be based on the votes.

Question: [Inaudible]

CA Assembly Speaker John Perez (D-Los Angeles):
If I may…correct, that does not have to be done by the 15th, and this is another shared area of interest to the Pro Tem, the Governor, and myself. Actually, in the last administration, I tried to completely restructure enterprise zones. We fell short. The Pro Tem had legislation trying to completely restructure enterprise zones. It fell short.

The Governor has a proposal that is very much in line with the principles that we had but has some very innovative ideas at how to better use the amount of money that we currently use for enterprise zones to do broad-base economic development. It’s something we’re very supportive of conceptually and we’ll see when and how we get there.

Question: [Inaudible]

CA Senate President Pro Tem Darrell Steinberg (D-Sacramento):
We’re going to be…We’re discussing the enterprise zone issue. It really is a matter of the votes.

The Speaker is right. I support the proposal because I think people forget that on a tax credit side that is every bit as much as an expenditure of money as spending on a program. And it kind of gets lost over there… because it’s a tax credit. Well, that’s $750 million a year – estimate last year. So we have an obligation – and the Governor’s proposed, I think, a very interesting and solid proposal that suggests there might be a higher and better use for that money on the business side. And so naturally, we’re going to talk about that with our colleagues and see what we can do.

CA Assembly Speaker John Perez (D-Los Angeles):
And again, it’s consistently the efforts the Pro Tem and I have individually and collectively worked on for several years. This is another area of us rowing in the same direction.

Question: [Inaudible]

CA Assembly Speaker John Perez (D-Los Angeles):
Correct. The current one makes zero sense. And what we’re proposing really tracks with the best use of our resources.

For example, if you have a year of decline following a year of expansion, under the old proposal, you’d still increase spending even though you know you’re in decline. That makes no sense.

Instead, what the proposal that the Assembly is working on does is look at the area of greatest volatility, which is individual income tax from high net worth individuals and, in particular, capital gains. If you look over the last 20 years, there’s been a fluctuation from about 3.5% to 14% of the general fund that comes from those sources. That’s the volatility. We see spikes and drops.

And so our proposal would take any spike above 6.5% of the general fund and move it into a rainy day fund until you build up at least a 10% of your general fund in a rainy day. When you have the fund completely full, you will only use that excess money – that spike money that continues to come in – for one-time purposes like paying down debt, for making infrastructure investments, for things that do not create year over year obligations.

If we have that in place during the recession at the beginning of the last decade, we would have been able to get through that recession without any major changes to the operation of the state. If we have that in place during the Great Recession, it would have cut in half the severity of the impact on the economy of the state of California.

Now, that’s a proposal that we’re working on. We expect to get it over the Senate. We expect the Senate to weigh in and help perfect it. And we expect to have it before the Governor for his evaluation.

Question: [Inaudible]

CA Gov. Jerry Brown:
Well, we have the Prop. 39 funding for many of these environmental projects. We’re the most aggressive in the Western Hemisphere in terms of our clean energy goals – 33% renewable energy for the electricity sector, very tight regulations on building and appliance efficiency. So anyone who says California is not in the forefront – well, they know what they’re talking about but they just pretend. [Laughter]

…Yeah, we’re borrowing that [cap and trade] money. We do that with a number of funds. We don’t think we’re quite ready yet and this is a reasonable accommodation.

Question: [Inaudible] – SEIU state worker contract which includes a pay raise

CA Gov. Jerry Brown:
Yes, I think it’s a fair proposal and I hoping that it will be ratified. I don’t want to say any more than that because I don’t want to interfere with the ratification debate.

Question: [Inaudible]

CA Gov. Jerry Brown:
I don’t want to characterize it because if I characterize it to please the critics – “It’s good for the taxpayer.” And if I’m trying to get it ratified, I’ll say “It’s a hell of a deal for workers.” So either way, I will err and therefore I will say nothing more other than that it’s fair. [Laughter]

Question: [Inaudible]

CA Gov. Jerry Brown:
Well, actually, we made a proposal and these legislative gentlemen refined it…Through the process stuff gets done and they are the experts in how you get the votes.

CA Assembly Speaker John Perez (D-Los Angeles):
If you ask the question about district by district considerations, again, I’ll refer you back to our blueprint. The whole idea was that every district should be made whole to the pre-cut level. And what this refined LCFF does is that it makes sure that every district within the state of California is made whole for the pre-cut level.

When you look at what the Governor talked about with respect to focusing additional resources to English learners and folks with other significant impediments, concentrations of poverty and the like, we wanted to make sure as well that you didn’t lose the impact on the individual student in dealing just with the district by district analysis.

So a lot of work was done by many people to make sure that in the end we make this historic shift in the way that we fund schools that is a net increase for everybody but that does help us draw resources to where they’re most severely needed.

CA Senate President Pro Tem Darrell Steinberg (D-Sacramento):
I was just going to add, I think it’s important to recognize that this is a tough thing because you’re dealing with district by district considerations but we didn’t want to lose sight of the goal of the proposal and that was to get more money to students from disadvantaged backgrounds.

And we were able working again with the administration in a bicameral fashion to both increase the base grants so that no district lost but maintain that progressive proposal that the Governor put forward in the first place.

And you know, the other thing that you should recognize is that the numbers are a target. And once those targets are met, even if they’re met earlier than 8 years, there will be room for the Governor, legislature to look at this, refine it, potentially add to it. It’s a good solid proposal that will win.

Question: [Inaudible]

CA Assembly Speaker John Perez (D-Los Angeles):
Look, I think we’re in a very good place. The counties individually and collectively through the California State Association of Counties have been very engaged with both houses but in particular with the administration in making sure that we have a fit that makes sure that the state doesn’t have an undue level of risk, to make sure that the counties don’t have an undue level of risk.

The other thing is that it’s mindful of the fact that despite the expansion that we’ve proposed, despite the beginnings of implementation of the exchange, which will become fully operational later, there are still people that are uninsured that will still go to public hospitals and other county services to receive emergency health care.

So we believe that we’re very close to an agreement that serves the broad-base interests of those counties and the state, and it really serves the health care interests of everybody in the state of California.

Thank you.

###

Learn More:

One Comment on “Transcript: Press briefing Q&A on an agreement for the 2013-14 California state budget

  1. Pingback: Transcript: Press briefing remarks by CA Gov. Jerry Brown announcing an agreement for the 2013-14 state budget | What The Folly?!

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>