Healthy Budget Surplus for California Translates Into Modest Spending

California

As the economy of California continues to expand at a very comfortable pace, Governor Jerry Brown plans to keep spending at conservative levels in an effort to grow the state’s coffers in case of emergency. According to a news release published by NBC 4 of Los Angeles, Governor Brown intends to stick to his formula of moderate state budgeting for his final year in office.

The Office of the Governor released budget statements during the early days of 2018, and the final address by the Governor took place January 10. Governor Brown’s budget for 2018 includes $132 million in spending, with a projection of $300 million in 2019; this plan would effectively leave California with a $6 billion budget surplus, perhaps even more as revenue from legal cannabis sales starts being collected. With regard to this point, the Governor added that the previous revenue projection of $i billion was revised downward to $643 million since this is a new retail activity that will require the establishment of new revenue reporting and collection practices, and thus trial-and-error situations are to be expected. The California Rainy Day Fund that is set aside for financial emergencies will likely be expanded in 2018 thanks to additional revenue from recreational cannabis sales.

Revenue collection was another important point addressed by Governor Brown. The tax reform package approved by Republican Members of Congress and by President Donald Trump will force California to modify the way income taxes are collected. Working sessions to implement the necessary changes started in the second week of the year and will continue throughout January.

Although the Governor’s budget does not reflect austerity, some lawmakers believe that new spending should be approved for items such as health care benefits for the thousands of immigrants who are relocating to the Golden State after new legislation that came into effect on January 1 has transformed California into a sanctuary jurisdiction. Assemblyman Phil Ting, a Democratic senior member of the committee in charge of budgetary affairs, would like to see discussion on a plan to allocate $4 billion towards a health care plan for immigrants; the idea is to prevent a public health crisis in the future.

California Republicans have taken the unusual step of agreeing with Governor’s Brown restrained spending; however, they also mentioned that the sizable surplus is indicative of a taxation policy that is squeezing residents of the Golden State. Governor Brown will have discretion to increase spending this year, but analysts do not believe that will be the case.


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