Yesterday, the Brown Administration released details of the Governor’s 2016-17 proposed Budget.  While California’s overall Budget picture remains positive, Governor Brown continues to urge Budget constraint in anticipation of the next economic recession.  While unveiling his proposed State Budget for 2016-17, the Governor opined “…it would be short-sighted in the extreme to now embark upon a host of new spending only to see massive cuts when the next recession hits.”  

To reflect this constraint and anticipate the historic trends that have occurred since 1945, the Governor’s 2016-17 proposed Budget continues to bolster the State’s Rainy Day Fund and pay down State debts and liabilities, many of which continue to satisfy K-12 education obligations.  Much of the General Fund surplus revenue that is not obligated to debts has been allocated to one-time programs, primarily infrastructure-related projects.

In total, the Governor’s 2016-17 proposed $170 billion Budget reflects a spending plan that includes $122.6 billion General Fund expenditures (a nearly $8 billion growth in General Fund spending), $45 billion special fund expenditures, and $3 billion bond expenditures.  Of primary importance is the Governor’s call to address the Managed Care Organization Tax (MCO) shortfall that looms as a result of recent federal decisions surrounding the process California has utilized in securing federal Medicaid monies.  The MCO tax plan proposed by the Administration provides nearly $1 billion to comply with recent federal requirements, and is expected to be addressed in the Special Session on Healthcare, which was convened last summer.  In addition, the Governor is calling upon the Legislature to enact his proposal to levy additional revenues for transportation.  A significant amount of these proceeds would be dedicated to local governments to address existing streets and roads maintenance and rehabilitation needs.  The Governor also expects transportation funding to be addressed in the other Special Session convened last summer for transportation.

Key Issues/Changes for RCRC Member Counties

The Governor’s 2016-17 proposed Budget:

  • Provides $644,000 for the State’s Payment in Lieu of Taxes (PILT) Program for 2016-17;
  • Provides $250 million for local jail construction projects for counties that have not been awarded monies under recent jail funding programs;
  • Allocates $3.1 billion in Cap-and-Trade auction proceeds for greenhouse gas reduction programs including transportation, forest health, and waste diversion;
  • Provides an ongoing $2.6 million for the support of local fairs as well as another $4 million for critical infrastructure needs to complement the $7 million provided last year; and,
  • Provides monies to commence regulatory activities associated with medical marijuana including funding for environmental clean-up activities associated with cultivation.