Thanks to last November's passage of the Proposition 30 ballot initiative, California is projected to be deficit-free for the first time in five years.
Yesterday Governor Jerry Brown released his $97.7 billion spending plan for the 2013-2014 fiscal year. The governor's proposal represents a 5% spending hike over the current year, increasing funding for K-12 schools, as well as for the University of California (UC) and California State University (CSU) – both of which, due to Prop. 30, were also projected to avoid tuition increases.
Crediting the ballot initiative for the state's first balanced budget in years, Brown announced: "California today is poised to achieve something that has eluded us for more than a decade - a budget that lives within its means, now and for many years to come."
California's finances had long been in dire shape, in 2009 facing a $42 billion deficit. As a result, construction projects were frozen; and, instead of mailing tax return checks, the state controller sent out IOUs. Last year the state had an estimated $9.2 billion shortfall, which Gov. Brown says Prop. 30 erased.
Brown drafted and heavily campaigned for Prop. 30, a state constitutional amendment that temporarily raises California's sales and income taxes. The measure increases the state's sales tax from 7.25% to 7.5% for four years, and also creates several new high-income tax brackets, resulting in a seven-year income tax increase for California's biggest earners. Resulting revenue is estimated at an annual $6 billion to $9 billion, to be allocated to education. The measure also guarantees public safety funding, in addition to balancing the budget and helping to avert planned spending reductions.
The Huffington Post stated that a high turnout among young voters contributed to the approval of the initiative, which passed with more than 55% of the vote. UC and CSU students and faculty reportedly supported Prop. 30 as a means to avoid tuition increases and budget cuts. If the measure had not passed, the governor may have been forced to drastically slash spending on education.
Even with the deficit eliminated, however, because of past practices of deferring payments, California must now repay a so-called “wall of debt” – amounting to almost $29 billion – to municipalities, schools, and other organizations. Brown wants to begin repayments in the coming fiscal year.
Gov. Brown's 2013-14 spending plan now goes to the legislature, which will likely begin hearings this month. Lawmakers have until mid-June to pass a budget for the coming fiscal year, or else forfeit their salaries until it is enacted.