Transcript: CA Gov. Jerry Brown’s remarks on the proposed 2014-15 state budget – Jan. 9, 2014
Partial transcript of remarks by Gov. Jerry Brown (D-California) on the proposed fiscal year 2014-15 state budget. The press conference was held on Jan. 9, 2014:
So good morning. We have a lot of information about this year’s budget.
And I will say that for this year, there’s very good news. Good news in the fiscal stability and resources available for the state of California.
I would also caution warnings that by no means are we out of the wilderness. We have serious issues before us in terms of long-term liabilities, debts, and we must be very prudent in the way we spend public funds.
But the good news is that we’re putting $10 billion into the schools in California. After years of drought and cutbacks and pink slips for the teachers, we’re finally being able to provide a substantial amount of new money for all the schools through California.
In addition to that, we’re expanding health care for millions of Californians, and we’re protecting public safety through our realignment initiatives – buying more prison beds to increase our capacity and comply with the court orders and also spend more money on rehabilitation.
So schools, health care, public safety – the three vital elements that a government owes its people. This budget reflects in a very strong way a strong commitment to deal with public safety, health care, and education.
Now, let me just explain a few things here. This chart over here very graphically represents the last 10 years, and as you can see, the red ink is far more predominant than the black ink. So up here is where the state was not in deficit. Down here represents all the deficits.
Now, some people would say because we have this little, little black mark there that we should go on a spending binge. I don’t agree with that. We see the lessons of history.
Now, there’s one more point that is worth looking at. And that’s this chart right over here which shows you the volatility of capital gains.
Now, there’s two points I want to make about this chart.
One, starting back during the Reagan era, during the time I was governor, Governor Deukmejian and Wilson, the gradual growth in capital gains was fairly modest.
Starting about the ’90s we get a soaring in capital gains wealth. But of course the capital gains – so this is part of the inequality growth that we’re seeing. This does not reflect how wages grew. This is for that very small piece or part of our society that gets wealth from its stocks and its capital investments.
But what goes up, just as sharply goes down. It did that once. It did it again, and now it will maybe – we’re not quite sure what it’ll do. But we know over time that that zig zag will follow us.
Now, some people have not seen this chart and have not looked at the data. So they think because we’re up here, it’s time to spend.
In fact, we had two governors that occupied the governor’s office and when they were here, they said, “Hallelujah! Let’s spend.” Down it went. Because the problem up here is that if you make commitments to employees’ salaries, to programs that are ongoing, then when revenue drops, then you’re in a hole, so then you’ll have to borrow. And that’s exactly what caused the second chart. That’s one of the reasons, besides the recession, that we had all that.
Now, I’ve already mentioned most of this – education, health care. We eliminated $11 billion in debt. We build a lasting rainy fund. We hold the tuition at the colleges flat. And we have $500 million for more prison capacity and offender rehabilitation.
So, the big story here is that we are investing in education. That’s the big takeaway of the positive. And the health care.
But the second point is we got lots of long-term liabilities. So a lot of programs are very attractive and may have very positive values and may not, depending upon how you get into them.
But when you have this level of long-term liability, it isn’t time to just embark on a whole raft of new initiatives when we still have this kind of liability, and that’s the problem.
California has a strong budget. It is a balanced budget. But it is by no means a budget free from liabilities. The teachers’ retirement fund is an immediate and serious one. The wall of debt – that’s $24.9 [billion]; in this budget, we take it down to $13.1 [billion] because we’re going to pay off the deferrals to local governments.
So all and all, this is a wise allocation of the public funds and it does represent prudence in how we proceed.
And prudence is never easy. When the money’s in, people want to go for it. And we’ve tried to keep it very measured. And that’s really the story and will be the story of the coming year – how we’re able to work with the legislature, with the advocate groups to maintain our long-term path in reducing liabilities but investing in the basic services.
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