Monday, January 25, 2016

Jerry Brown says state must pay debt, new taxes on horizon

Jerry Brown says state must pay debt, new taxes on horizon

By Melody Gutierrez
Updated 7:50 pm, Thursday, January 21, 2016
SACRAMENTO — California needs to stay focused on building a reserve fund for an inevitable recession and anticipate that new taxes will be needed to pay for crumbling roads and bridges, Gov. Jerry Brown said in a State of the State speech Thursday that was big on chores, short on glamour.

The state’s $77 billion in deferred maintenance — primarily for fixing roads, highways and bridges — is a problem that must be addressed, the four-term governor told lawmakers in his 14th State of the State speech.

“That means at some point, sooner rather than later, we have to bite the bullet and enact new fees and taxes for this purpose,” Brown, 77, said. “Ideology and politics stand in the way, but one way or another the roads must be fixed.”

Brown spent much of his 20-minute speech recounting what California has accomplished in recent years, telling lawmakers he would not propose new programs. Instead, Brown said his focus this year will be on how the state will pay for commitments it has already made and brace itself for the next recession.

Since World War II, he told lawmakers, there have been 10 recessions “none of them expected or accurately predicted,” Brown said.

He spoke of the widening gap between the rich and poor and highlighted the state’s raising of the minimum wage and introduction of an earned income tax credit for low-income families.

Undaunted by problems

“Difficulties remain, and they always will,” said Brown, who has three years remaining on his final term as governor. “That is the human condition. And finding the right path forward is formidable. But find it we will, as we have in the past and as we will again — with courage and confidence.”

The governor last year asked lawmakers to address the state’s transportation funding needs, calling a special session to hammer out a deal that has not yet been reached.

Republicans widely praised the governor’s calls for building reserves and paying off debt, but said they did not agree that new taxes are needed to fix the state’s transportation troubles.

Assembly Republican Leader Chad Mayes, R-Yucca Valley (San Bernardino County), said the state first needs to ensure that transportation funding already being spent is used wisely.

“Let’s have that conversation first, then let’s see where we are at,” Mayes said.

Earlier this month, Brown unveiled his record $122.6 billion budget proposal for 2016-17, with large charts showing the likelihood of an economic downturn prominently displayed around him. The same “boom and bust” charts have been a fixture at Brown’s news conferences, and printouts were included in press packets passed out at the State of the State.

“I don’t want to say he’s in a doom-and-gloom mood, but he’s very sensitive to a recession,” said state Sen. Mark Leno, D-San Francisco.

Infrastructure spending

In his State of the State, Brown proposed using $2 billion in “temporary surplus” money in this year’s budget for a one-time investment to repair aging infrastructure, from state office buildings in Sacramento, to levees, prisons, state hospitals and parks.

Brown warned about the rising cost of Medi-Cal, which has grown by $23 billion in four years for the state and federal government. In-home Supportive Services is expected to jump from $2 billion to $9.2 billion, Brown said.

“As the economic recovery reaches its end point and turns downward, it is crucial that we honestly face and plan for these increased costs,” Brown said.

Noticeably missing from Brown’s speech was any mention of high-speed rail, one of the largest infrastructure projects in the state that has a long list of detractors. Brown skimmed over another project he’s championed — the controversial delta tunnels — although he said the state needs a wide range of investments in water reliability, including “reliable conveyance.”

Brown pledged to work with lawmakers on water issues to “achieve results that will stand the test of time.”

Governor criticized

Democratic lawmakers said more can be done to help the most vulnerable in the state. Outside the Capitol, advocates blasted Brown for not providing more funding for the developmentally disabled.

“We can make targeted investments that make sense,” said state Senate President Pro Tem Kevin de León, D-Los Angeles. “The greatest asset we have here in California are the people, and we have to make sure we educate them and give them opportunities.”

Lt. Gov. Gavin Newsom, who is running to replace the termed-out Brown in 2018, said he agreed with the governor’s overall message of restraint, but that there remain many needs in the state, from the hardships students face to gaps in prenatal care.

Newsom’s take

“It was very sober and contextualized a reality that only someone like Jerry Brown can appreciate through experience,” Newsom said. “It’s a consistent speech. This has been the message of the governor.”

Newsom said he’d propose similar restraint if elected governor.

“Maybe I’d add a little here or there,” Newsom said. “But look, I like what he said. It’s a starting point.”

Melody Gutierrez is a San Francisco Chronicle staff writer. E-mail: Twitter: @MelodyGutierrez

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