(Adds details on budget deficit, Trump administration)
By Rory Carroll and Robin Respaut
Jan 10 California Governor Jerry Brown on
Tuesday proposed a $179.5 billion state budget for the 2017-2018
fiscal year, a 5 percent increase over this year, but warned
that the state must remain fiscally prudent ahead of an
inevitable economic downturn.
The Democratic governor also proposed a $122.5 billion
general fund budget for fiscal year 2017-18, virtually unchanged
from this year.
Brown said the surging tide of tax receipts over the past
few years appears to have turned, and that the state now faces a
budget deficit of $2 billion, its first in five years.
Although the $2 billion is much smaller than the $27 billion
the state faced in 2011, he said it demanded immediate
"Small deficits can quickly mushroom into large ones if not
promptly eliminated," Brown said in a statement.
Brown's budget proposed to boost funding for state reserves,
education, healthcare expansion, and transportation
infrastructure, counteracting poverty and combating climate
change, while rolling back some planned spending increases.
Brown stressed the need for the state to bolster its rainy
day fund in anticipation of an economic recession.
"California has the most progressive tax system in the
United States," Brown told a press conference on Tuesday.
"But as a corollary, we have one of the most unreliable
revenue systems in the country," he said, referring to the
state's greater reliance on capital gains taxes and less on
property tax revenue.
Republicans warned that the incoming Trump administration
could have a negative impact on the state's finances.
"We face a multi-billion dollar gap in federal funding, and
the state needs to be responsible enough to plan for a
substantial loss of federal dollars," Republican state Senator
Jeff Stone said in a statement on Tuesday.
When asked about how California would respond to the
incoming administration, Brown said the state cannot budget for
something that has not happened yet.
There was a lot of uncertainty about what the Trump
administration and Republican Congress would actually do on
issues like healthcare and immigration, he said, adding that the
state will remain vigilant.
Brown said the state would continue to be an international
leader in combating climate change while also fighting any
efforts to deport large numbers of undocumented immigrants.
The budget will now go to lawmakers in the
Democratically-controlled state Assembly and Senate before a
revised version of the budget is released again in May.
(Reporting by Rory Carroll; editing by Diane Craft and Tom