By State Assemblyman Curt Hagman
Governor Jerry Brown recently introduced his budget plan for the 2014-15 fiscal year, setting off a six month debate over how best to use our state tax dollars. If nothing else, this year’s conversion will be different in tone from previous years as the state is projecting an unexpected surplus.
I welcome the discussion on how to use this potential surplus. However, we should treat such news with caution because this surplus is dependent on personal income taxes, California’s most volatile revenue stream. During the “dot-com” bubble of 2000, personal income taxes made up 60 percent of state revenues. With the passage of the Governor’s Proposition 30 in 2012, personal income taxes now make up 75 percent of General Fund revenues – the highest level in state history. We see a surplus because the state raised taxes and Wall Street is doing well. These funds will immediately disappear if businesses, job creators, and our highest contributing taxpayers continue to abandon California.
Despite the lessons of history, legislative Democrats want to spend any surplus on expanding government programs. They want to commit the state to massive ongoing spending increases that taxpayers cannot afford, thereby setting the stage for even higher taxes and more severe cuts in the future. It is naïve to think that we can pop the champagne and spend away money that may never materialize.
That is why I agree with the Governor’s call for spending restraint. He was correct in saying that we are not out of the “wilderness” and “we must be very prudent in the way we spend public funds.” I support efforts to deposit any real surplus into a strong rainy day fund that can only be tapped in true emergencies such as earthquakes and wildfires. Having such a fund will protect schools and other vital programs from drastic budget cuts in the future.
I also support the Governor’s call to reduce the state’s “Wall of Debt” that is taking precious dollars away from needed services. The state faces a combined $350 billion debt in unfunded state retiree health care and pension obligations along with owing $10 billion to Washington to repay a loan for unemployment insurance increases during the recession. The quicker we can pay off these debts, the better off we will be for future pressing needs.
Additionally, any final budget that the Legislature approves should invest in infrastructure projects that create and promote jobs which are essential to the state’s economic health instead of spending money on social programs. By tending to long-neglected infrastructure needs, we can help create jobs, improve the movement of goods, ensure a better-trained workforce and generate more tax revenue for education.
From now until sometime in June when the Governor signs a budget into law, lawmakers need to be open and transparent when crafting a final draft. I will continue to fight to protect funding for priorities such as education and public safety, and to end wasteful spending on projects such as the high-speed train to nowhere.
We may have a unique and rare moment to pay off past debts and invest in the future this year - if the legislature should seize it. Doing so will ensure we will be better prepared for the challenges of tomorrow. Like that of your home budget, the legislature should plan for the future.