The Democratic Caucus in the California State Assembly has published a video praising the 2018–19 state budget and in particular the $16 billion in reserves the state now has set aside in preparation for the next downturn in state revenues. That praise is well deserved.
In May Governor Brown reminded legislators that the next recession “will drop state revenues by over $20 billion annually for several years” and that unfunded retirement liabilities grew “by $15 billion since the January budget alone” to nearly $300 billion. While $16 billion is not nearly enough in reserves given those two challenges, it establishes a first level of defense and demonstrates unprecedented behavior by state legislators during a bull market in state revenues. Legislators also rejected a proposal to expand an entitlement that would’ve jeopardized funding for courts, parks, UC, CSU and social services.
Budgeting rules and pressure from special interests make it difficult for legislators to save money or protect future generations. GFC joins in praising Governor Brown and state legislators for governing in the general interest.