FOR IMMEDIATE RELEASE: May 14, 2015
CONTACT: Jacqui Nguyen, firstname.lastname@example.org, (916) 651-4029
Senate Republican Budget Priorities
SACRAMENTO – Here is a quick review of priorities from Senate Republicans. Earlier today, the Governor released his May budget revisions. Senate Republicans and the Governor agree that we must keep our promises to invest in education, pay off state budget debts and liabilities, and save money for a rainy day.
2015-16 May Revision Talking Points
- Deliver on Your Promises – We promised California families that we would invest in education, pay off state budget debts and liabilities, and save money for a rainy day as our top priority. The Governor’s budget seems consistent with Senate Republican priorities.
- Do Not Create New Budget Deficits – Californians deserve responsible government and they will be rightfully outraged if Legislative Democrats turn yet another revenue surplus into a budget crisis. It has already happened twice in the past 15 years.
- Invest in California Families – One of the smartest ways to use surplus revenues is to put them to work creating good jobs for Californians by fixing our roads, expanding water storage, and building schools. It’s good for the budget and good for California.
- Use Surplus Revenues to Keep Promises: Tax revenues have soared since the last state budget was approved in June 2014. Compared to last year’s (2014) state Budget Act revenues are $14 billion higher than expected. Much of these new revenues will go to fund Proposition 98 K-14 education programs and to build the Proposition 2 “Rainy Day Fund.” This is a great use of those funds and consistent with the direction the people of California gave us via the ballot. The main concern is whether the ruling Democrats are going to keep the promises made to the voters or will they find loopholes to divert money to please their special interest groups.
- Education and Proposition 30 Taxes: We are very pleased that schools are getting additional funds and low income/English learners and foster youth will get a great boost, but it is still not as much as promised by supporters of Proposition 30. We are very glad to see increased funding for our K-14 education system and continued work on implementing the reforms to help low income students, English learners, and foster youth. However, as has been the case each year since the voters passed the Proposition 30 tax increases, much of those funds are not going to education programs. The funds should be delivered as promised.
- Higher Education (Tuition): Republicans stand with students, families and teachers to demand lower tuition and more accountability. College must be affordable and accessible for every Californian. The Governor provides $96 million for the UC system which will only be available if they agree to freeze tuition for 2 years and implement pension reform. The CSU system will get an additional $38 million for student success measures. The Governor has made some good points and raised appropriate concerns regarding the level of accountability and transparency at our state universities. Freezing tuition and the number of out of state students at UC has some merit. Republicans continue to stand with our students, teachers, and families in calling for funding to reduce tuition and other costs. College should be affordable for all Californians, and every qualified California student who wants to attend our state universities should have a spot. We will continue to fight on their behalf to ensure state government is responsive to their needs, hopes, and dreams.
- Budget Not Balanced Until Debts are Paid: We are in better shape than we have been in years, but it is precariously balanced because we still have hundreds of billions in outstanding debts and liabilities. In general the Governor has proposed a reasonable budget that appears to be balanced in the near term. However, with hundreds of billions in unfunded liabilities and other debts for public employee pensions, retiree health care, and infrastructure, the term “balanced budget” is misleading.
- Increase Rainy Day Reserve Fund: We agree with Governor’s approach. It is important to keep faith with voters and not divert money from the reserve for impulse spending today. We need to be prepared for the future. We are pleased that the Governor’s plan keeps faith with voters on the Proposition 2 Rainy Day Reserve Fund. Republicans fought long and hard to get that reserve onto the ballot for the people of California, who supported it overwhelmingly. The Legislative Analyst has advised us to continue making progress in building the budget reserve, and the Governor seems to agree. The big concern right now is how legislative Democrats choose to act on that reserve. We don’t know if they will be fiscally responsible or if they will raid the reserve and break the promise they made to voters when we put Proposition 2 on the ballot.
- Do Not Repeat Past Mistakes: California families deserve responsible government. The last two budget crises (i.e., 2001 “Tech Bubble” burst and 2008 “Housing Bubble” burst) were triggered by revenue windfalls much like we are seeing now. The Legislature went on a massive spending spree that was unsustainable and led to more than a decade of budget deficits, spending cuts, and tax increases. The most important thing we can do is learn from those past mistakes and make sure we put surplus money into the rainy day fund, debt repayment, and invest one-time funds in infrastructure such as transportation, water, and schools projects. Prepare for the future without creating new budget deficits. It’s just common sense.
- Record High Spending Levels: Many special interests will never be satisfied, but state spending far exceeds pre-recession peaks and achieves new record levels. We should not create new budget deficits by spending more than we can support in the future. With all the cries for more new spending, it is important to recognize that this budget grows total state spending by $13 billion over last year’s budget (General Fund spending alone increases by $7 billion over last year). It is a new record high spending level of nearly $267 billion, and is $70 billion more than peak state spending prior to the recession. Our state finances are already strained. If spending continues to grow at this pace (and we know Democrats want to add more on top of it), we will have another budget crisis. That is a real concern. We don’t want to see the people who depend on these programs hurt. We don’t want to see education programs threatened again, and we don’t want to see working families held hostage for another round of tax increases to balance the budget because of irresponsible spending decisions.
- Debt Repayment: The $600 million of debt repayment proposed by Governor is commendable and a good foundation to build upon. More work should be done. The roughly $4.8 billion in debt repayment is a great step towards securing our state’s financial future, but until the nearly $300 billion still on the credit cards is paid off we really shouldn’t be patting ourselves on the back for a balanced budget – right now it’s just balanced on paper for one year. Obviously there is a lot more work to be done to ensure our children and their children aren’t paying for past mistakes. As the Governor said: “we haven’t reached the promised land.”
- Safety Net Spending: Caring for the Californians living in poverty and providing them the supports, tools and opportunity to move out of poverty is vitally important. California has one of the most generous government safety nets for the poor in the nation, but it is not clear that our programs are working very well. After education, health and human services spending is the largest spending item in the budget. Compared to other states, California provides broader health coverage to more people, including in-home care, and guarantees access to services for people with developmental disabilities. California offers higher cash assistance for those on welfare, continues assistance to families even after the adults lose eligibility, and provides extensive child care to working families. California also provides the most generous financial aid in the nation to those seeking higher education. If our safety net system is still failing too many Californians then it may be time to consider how our programs can be made more effective and beneficial. We already spend more than any other state, but it is not clear that we have put in place any systems to evaluate how well that money is spent or what the best methods are for helping those in need.
- Invest in California Families: Surplus revenues provide our state with a terrific opportunity to help struggling California families. By investing in infrastructure projects that fix our roads, increase water supplies, and improve our school buildings we can create good paying jobs. While the Bay Area and Silicon Valley are thriving, many other parts of our state are still experiencing double digit unemployment and we have a responsibility to put resources into those communities. A smart approach like the one we suggest will create job opportunities for struggling families and provide the foundation for all Californians to have a successful future.
- Transportation Infrastructure: Republicans proposed SCA 7 as a critical piece of any plan to increase transportation funding. SCA 7 will ensure that all existing and any new transportation taxes and fees are used only for transportation purposes. Returning the $1 billion of annual truck weight fees is the right thing to do and can easily be supported by the billions of surplus state revenues that are currently pouring in. While much of the new revenue will go to K-14 education and the new Proposition 2 Rainy Day Fund – as it should -no one should pretend there isn’t sufficient room in the budget to prioritize our crumbling transportation infrastructure. Use of transportation taxes and fees for transportation purposes is fundamentally important, and we should make that a budget priority BEFORE hitting up our struggling middle class and low income families for more car taxes and gas taxes.
- * High Speed Rail: It is a costly project that will never pencil out. We can invest this money in other ways that are better for all Californians. The budget includes $500 million from Cap and Trade funds to continue chasing the high speed rail train. The people of California no longer support the high speed rail project because it has become clear that it is an ill-conceived boondoggle that will drain billions away from better projects such as fixing schools and our crumbling transportation infrastructure. We can do better.
- Cap and Trade: Provides another tax revenue windfall. We want transparency and accountability for these new taxes, and understandable science based metrics to justify the expenditures and understand their effect on California’s environment. Californians want to know what they are getting for their money. Given the extremely high cost of housing and energy in California we must balance our environmental policies with consideration of the real world impacts to our constituents. The cap and trade scheme and related policies put the greatest burdens on low income and middle class Californians, but the benefits go to a wealthy few. Low-income households spend 38 percent more on gasoline as a share of income compared to higher-income households. Our state gas taxes are 43 percent higher than the national average and that doesn’t include the new hidden carbon tax that just took effect in January. That’s money working families need for their kids’ food and clothes, and to pay their rent or mortgage. We should consider using these funds for transportation infrastructure (i.e., less traffic means less carbon pollution) instead of imposing the new car taxes legislative Democrats are proposing to hit our families with.
Other Notable Issues:
- Earned Income Tax Credit: TheGovernor proposes a state earned income tax credit
(EITC) costing about $380 million annually. This proposal is a scaled back version of a proposal by Senator Vidak (SB 152), and several legislative democrats also have EITC plans. The Governor’s proposal is similar to Sen. Vidak’s measure in that both include efforts to deter fraud and overpayments that are a serious problem for the federal EITC. The state EITC would only be available to someone who receives a W-2 and there would be resources for FTB to do audits and safeguard program integrity.
- Drought Response: Over $2 billion is available for drought response. Most of the resources come from Proposition 1 with additional funds from Cap and Trade and the General Fund. Drought relief assistance is especially important to California’s Central Valley communities and funds are appropriately targeted there. Republicans continue to believe water storage is a key component of any plan to address California’s water shortage.
- Revenue Growth and Proposition 30: Exceptional revenue growth demonstrates Proposition 30 tax increases should be “temporary” as promised. Given the exceptional tax revenue growth we are experiencing it is very clear that the “temporary” Proposition 30 taxes should expire as promised by the Governor. Base revenues are booming and state spending is surging – there is no good reason to keep over-taxing California families to simply provide “windfall” revenues for the state treasury.
- Public Safety Realignment: If it is going to work we must provide adequate funding for local governments to manage the offenders with supervision and programs. That’s not happening now. As the Governor and legislative Democrats continue to experiment with public safety, it has become clear that state prison costs are still growing and so is the cost burden for the felons we shifted to local government control. We believe that if we are to continue down this road the only hope for success is to provide our local government partners with adequate funds to properly manage and supervise these criminals, and to provide the necessary recidivism reduction programs like job training, education, drug treatment and mental health counseling. Right now that is not happening and it won’t end well if we don’t fix it now.
- Health Provider Rate Increases: We must make sure that our current health services programs work before considering new programs and expansions. If there are sufficient surplus revenues a top priority should be to increase Medi-Cal and developmental services provider rates, rather than launching new high-cost program expansions. California has enrolled millions of new people in Medi-Cal without ensuring there are enough doctors to take care of those people. A health insurance card without access to a doctor is useless. With nearly one-third of Californians enrolled in Medi-Cal, a high priority should be to restore the reductions made to Medi-Cal provider rates if funds are available, rather than expanding programs beyond their current levels.