Debate rages over California’s budget surplus
May 26, 2013
After years of battling over state budget deficits and spending cuts, California lawmakers are now arguing over how the state should deal with an unexpected surplus. [NewYorkTimes]
The Legislature’s independent financial analyst estimates the surplus at about $4.4 billion while Gov. Jerry Brown projects the surplus at closer to $1.2 billion.
Nevertheless, advocates for the disabled and those impacted by social program cuts believe some of the money should be used to reverse those cuts while others want the money put away for the next economic downturn.
Proponents of putting the money away for a rainy day note the uncertainty about whether the revenue is a one-time event, the result of wealthy residents selling off investments at the end of last year to avoid increased costs as federal tax cuts expired.
Brown opposes significant increases in social program spending and wants the excess put into savings. His administration provided the lower $1.2 billion estimate.
“A good deal of the surge of revenues that we have seen since the beginning of the year is the result of higher-income individuals being able to realize some of their gains at the end of 2012,” said H. D. Palmer, the director of external affairs for the California Department of Finance to the New York Times. “We don’t believe it is prudent to budget on the capital gains. It wasn’t that long ago when we had the same experience during the dot-com boom. We don’t want to see that movie again.”
The office of the independent legislative analyst called Brown’s figures pessimistic, saying the extra revenue was closer to $4.4 billion.
“I support the governor’s call to pay down more debt aggressively, I support the notion of a rainy-day fund,” said Darrell Steinberg, the president pro tem of the Senate to the New York Times. “But I also believe that we have an obligation to make some limited but important investments in restoring some of what has been lost over the last four or five years.”