After Gov. Jerry Brown warned of fiscal and political uncertainties in light of a new president and the state’s precarious budget leaning toward a nearly $1.6 billion deficit, San Mateo County lawmakers expressed caution while also urging momentum to address pertinent priorities like housing and transportation.
Brown unveiled his proposed $179.5 billion spending plan Tuesday, kicking off negotiations with legislators before the 2017-18 fiscal year budget is finalized in the coming months.
Consistent with years past, the fourth-term governor has proposed another fiscally conservative budget that many Republicans and Democrats alike praised as conscientious of future uncertainties.
Brown warns of a projected downturn in revenue and the inevitable recession looming closer than years past. Add in the potential for significant changes to federal policies ranging from health care to climate change with president-elect Donald Trump slated to take office next week, and California leaders are favoring a cautious approach to spending.
State Sen. Jerry Hill, D-San Mateo, said he anticipates changes during Brown’s May budget revision will reflect possible federal policy shifts.
“There’s so much uncertainty in the future of California related to the economy, to economic growth as well as the effects of Washington,” Hill said. “What happens in the next three or four months, that will affect what we do.”
Assemblyman Kevin Mullin, D-South San Francisco, agreed the state’s budget could take a hit under a new presidency. He noted the most draconian estimates predict a $15 billion hit to California’s pocketbook if Congress repealed the Affordable Care Act.
“But it’s very, very difficult at this juncture to gauge or project what that hole in our budget is going to be because it really is contingent upon a whole host of political factors that are beyond our control,” Mullin said. “This is where I would applaud the governor’s prudence in his spending plan.”
Assemblyman Marc Berman, D-Palo Alto, echoed support for a fiscally responsible approach, particularly while the effects of the national election remain unknown.
“That being said, I was disappointed by a couple of things in the budget,” Berman said, citing reductions in support for affordable housing and a college scholarship program for the middle class. “A budget is the reflection of our values and I want to make sure the values I think we have are addressed in the final budget.”
Movement on transportation, housing
As Democrat leaders announced housing and transportation are top priorities this year, aspects of Brown’s proposal have come as a letdown.
Brown essentially revived a prior $4 billion annual transportation package — which includes raising gas taxes and adding a surcharge for electric vehicles — that is about $2 billion less than the Democrats’ proposal and what’s needed to address the state’s shortfall.
“I think this will be a key point of negotiations,” Mullin said. “Although the proposal is short of what we’d like to see, I think it’s encouraging that he is engaging in that conversation. Unfortunately, I can’t say the same about housing.”
While acknowledging California’s housing shortage is a growing problem with the state representing 39 percent of the nation’s chronically homeless, Brown isn’t ready to offer up new long-term funding solutions. Instead, he insists legislators find a way to ease development hurdles and lower costs through budget verbiage reminiscent of his by-right proposal. The key difference this go-round is his one-time $400 million offer for affordable housing needs is no longer on the table.
“At a time when we need to invest in affordable housing and transportation and other infrastructure to sustain the economic growth that we’re seeing, the governor, at least on affordable housing, is moving in the opposite direction. I really think there is a fundamental philosophical divide between the governor and the Legislature when it comes to funding affordable housing,” Mullin said. “We’re delinquent in our duty if we don’t address this crisis.”
With the governor aware the Bay Area serves as an economic engine for the state, Mullin noted investing in housing and alleviating traffic is good for business as well as California’s financial stability.
Brown has historically shown fiscal prudence and is again looking at financial projections that are more conservative than the state’s Legislative Analyst’s Office, said Berman, who emphasized the need to address issues that are of particular importance to the region.
“It’s great that we are building up these reserves, but we also need to make sure that we are able to address some of the real concerns that exist in California, in the Bay Area, on the Peninsula, in the 24th Assembly District. And I think public college affordability, and without a doubt housing and transportation are the most pressing issues that we’re facing,” Berman said.
But addressing these costly challenges could require new funding sources and local Democrats noted bonds or tax increases may be needed to make a dent in the state’s housing and transportation issues.
Republican state Senate leaders seemed less willing to embrace program expansions, instead agreeing with Democrats praise for Brown’s prudence in light of financial projections indicating a deficit for the coming years. Education and infrastructure were top priorities along with job growth and preparing for an inevitable downturn in the economy, according to the Senate Republican Caucus.
But unlike their counterparts, some Senate Republican Caucus members questioned whether fretting over Trump’s election was sound and instead suggested the state strive to cooperate with the new president. As in years past, senators also pointed to high-speed rail and tax hikes as unwise, according to a caucus press release.
Hill said he expects budget negotiations — with both Republicans and Brown — to eventually include fleshed-out spending proposals for critical issues like housing and transportation.
“It’s just where will the money come from?” Hill said. “It needs to be significant, but with a slight downturn in revenue noticed already and the fact that we’re almost at the end of growth before we see a recession, we have to anticipate that possibility. So there’s less inclination to spend more.”
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