Governor’s Budget Spares the Rod

There was a general sigh of relief when Jerry Brown released the 2013-14 Governor’s Budget . The Governor’s proposal, which will get worked over for the next 5 months in the Legislature, is the first in many years that does not project a deficit. But the Proposition 39 money has been largely absconded. An additional $250 million each for the University of California and the California State University systems is proposed. Kindergarten through high school funding has removed funding restrictions, known as Categorical Programs, allowing more local control, while providing substantial funding to pay down existing deferrals. By the end of the 2016-17 fiscal year, the Governor’s plan projects a $2.5 billion General Fund reserve. The Public Utilities Commission has a 4% increase, as does the Air Resources Board. The Energy Commission is slated for about a 4% decrease in funding overall, although they are scheduled for an increase of 50 positions. The Legislative Analyst, in his annual “ Overview of the Governor’s Budget ,” was generally complimentary about the Budget’s being “roughly in balance.” “I think we’re in a very different situation than we have been in the last 10, 12 years,” said Mac Taylor, Legislative Analyst. “At this time we would usually be sitting around talking about 20, 25, 30 billion dollar deficits.” Taylor said that while the Governor’s Budget proposes increases of 5% overall, California must remain cautious. He recommended that the Legislature follow Brown’s lead of restraining growth in most areas and paying down debt in various forms for years to come – what the Governor calls the “Wall of Debt.” In section headings describing the analysis, the Legislative Analyst starts out with “Positive Aspects …” then next “Some concerns with …” and finally, “Serious Concerns with Governor’s (wait for it) Proposition 39 Proposal.” The first and biggest problem cited by the Legislative Analyst’s Office (LAO) report is that the Governor’s Budget applies all the Proposition 39 revenues to the Proposition 98 calculation. California’s Proposition 98 takes General Fund revenue and allocates roughly half of it to schools. But the ballot pamphlet for Prop 39 stated quite clearly that half of the funds raised by the measure would go toward energy projects, and the other half would go to the General Fund. Then the Prop 98 calculation would only move about a quarter of the new revenues to schools. The Governor’s plan dedicates the entire $450 million for energy projects to schools, and counts it as part of their share of the Prop 98 calculation. The LAO recommends that the state count the $450 million as non-Prop 98 expenditures, with the net effect of a $260 million loss to schools. The state could still choose to spend a portion of energy efficiency projects in schools. “Exclusive Focus on School and College Facilities Unlikely to Maximize Energy and Job Benefits” says the LAO report. Proposition 39 specifically states that projects must be selected based on the number of in–state jobs they would create and their energy benefits. By dedicating all the energy–related funding over the five–year period only to school and community colleges and excluding other eligible projects that potentially could achieve a greater level of benefits, the Governor’s proposal very likely would not maximize state energy and job benefits, says the Legislative Analyst. The Governor’s plan is to distribute funds to school districts on a per-student basis, not according to greatest energy and job benefits as prescribed by Prop 39. The last area of violation of Prop 39’s provisions relates to expertise. Proposition 39 requires that monies from the newly-created Clean Energy Job Creation Fund be appropriated only to agencies with established expertise in managing energy projects and programs, and that funding be coordinated with the CEC and CPUC to avoid duplication and maximize leverage of existing energy efficiency and clean energy efforts. Instead, the Governor’s plan would appropriate the funds to the Department of Education and the Community College Chancellor’s Office. It may sound as if Governor Brown is an opponent to energy efficiency and clean generation, but we know the opposite is true. How then can we explain this horrific treatment of Prop 39 funds? When the budget is put together, it is an enormous task, one that is performed by the Department of Finance, not the Governor’s Office. There are many, many details that are not, indeed cannot be, covered in the high-level briefings. The culture inside the Department of Finance is one where they don’t care about your program, whatever it is. Every dollar in the budget is there because it has a constituency – a group of people who really care about the program. DOF budget analysts cannot care about your program and still be objective analysts. So each program is just so many numbers on a spreadsheet. The Governor and the Legislature however are elected by the people, and are responsive to input from the public. A word to the wise is sufficient.

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Governor’s Budget Spares the Rod

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