Gov. Jerry Brown signs California budget

Gov. Jerry Brown signed a new state budget late Wednesday night, ending California's annual haggling over state spending and leaving the future of public schools in voters' hands.



"This budget reflects tough choices that will help get California back on track,” Brown said in a statement.]

The governor plans to veto some individual items as he signs the budget bills, an administration spokesman said, but details are not expected until Thursday.

The budget finalized by the Legislature earlier on Wednesday includes $91.5 billion in general fund appropriations. Spending from special funds and bond funds brings the total size of the budget to $142.6 billion.

The budget, which goes into effect July 1, hinges on the expectation that voters will approve more than $8 billion in temporary tax increases at the ballot box in November. Without a higher sales tax and increased levies on the wealthy, the governor says, the state will cut billions from public schools.

Senate President Pro Tem Darrell Steinberg (D-Sacramento) said the budget includes tough spending cuts that will help convince Californians that the state can be trusted with more tax money.

“We are poised to take our case to voters in November,” he said.

Republicans have sharply criticized the budget, saying it relies on new taxes and gimmicks to gloss over the state’s problems.

“It’s the typical kind of budget we’ve had in the past that kicks the can down the road,” said Senate Republican Leader Bob Huff (R-Diamond Bar).

Brown's signature capped a long day at the Capitol, where Democrats pushed nearly two dozen budget-related bills through the Legislature. The bills are the result of weeks of negotiation with Brown, and they make wide-ranging policy changes to welfare, healthcare and college scholarships.

The budget may also be a prelude to other legal and legislative fights in the coming months. Lawmakers and local governments are at odds over how aggressively the state can move to scoop up property tax money that once funded redevelopment agencies, which are being dissolved this year. In addition, Republicans are threatening to withhold votes needed to extend a healthcare fee because Democrats are shifting poor children into a less generous insurance program.

article source: latimes.com

Facebook's stock price dives, and California could take hit

Facebook's stock has nosedived since the social media giant debuted on Wall Street earlier this month, and that's bad news for California's budget.

Gov. Jerry Brown was counting on about $1.5 billion in income taxes related to the company's IPO to help patch the state's swelling $15.7-billion deficit. But if the stock price remains low, a haul that big becomes unlikely.

The Brown administration pegged the stock at $35 per share -- lower than its $38 starting point but significantly higher than the $28.19 per share at the close of trading on Wednesday.

Jason Sisney at the nonpartisan Legislative Analyst's Office, which provides budget advice to lawmakers, said tax revenue from Facebook "could be hundreds of millions of dollars less than has been projected."

Of course, that assumes the stock price stays at its current level. And even if it does, Sisney said, there are other ways for the state to make up the difference. For example, the sale of Facebook stock would increase a California resident's tax bill.

The bigger question for the state budget, Sisney said, is how the overall stock market performs. That could sway tax revenue by billions, not millions.

H.D. Palmer, spokesman for Brown's Department of Finance, said the administration does not plan to redo its revenue forecast based on the lower Facebook share price.

He pointed out that the administration's $1.5 billion estimate did not include Brown's plan for higher taxes, which the governor hopes voters approve in November. If Brown's proposal passes, the state would reap more tax revenue from the Facebook IPO.

Asked if the administration is worried about the stock price, Palmer replied by email: "We’ve kept an eye on it –- but at the same time realizing that a) it’s only been trading for less than two weeks, and b) stock prices will fluctuate -- both down as well as up relative to an opening price."

source: latimes.com