Governor Brown, legislative leaders issue statements on budget agreement

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SACRAMENTO – Governor Edmund G. Brown Jr., Senate President pro Tempore Kevin de León and Assembly Speaker Anthony Rendon today announced that they have reached an agreement on the 2017-18 State Budget.

“This budget keeps California on a sound fiscal path and continues to support struggling families and make investments in our schools. We’ve come together on this balanced and progressive budget and I’m confident that we can do the same to extend our critical cap-and-trade program,” said Governor Brown.

“This state budget will keep California strong, protect our fiscal stability and empower our communities at a time when Washington is determined to undermine them. This budget makes historic investments in healthcare, education, and childcare, and lays down a multi-billion dollar investment to start fixing our roads and infrastructure. This is how government works – by the people and for the people,” said Senate President pro Tempore de León.

“This is a budget that does things for people, not to people. It is a combination of fiscal responsibility, including the biggest reserves in state history, major spending improvements to fight poverty and improve education, and significant reforms stemming from our strong oversight of the Board of Equalization and the University of California,” said Assembly Speaker Rendon.

Budget Agreement

Highlights of the budget agreement include:

Maintaining Fiscal Prudence: Under this agreement, the state continues to plan and save for tougher budget times ahead. The budget package adds $1.8 billion to the state’s Rainy Day Fund, bringing the fund to a total of $8.5 billion in 2017-18 – 66 percent of the constitutional target. However, with the federal government contemplating actions that could send the state budget into turmoil – including defunding health care for millions of Californians, ending deductions for state taxes and eliminating funding for organizations like Planned Parenthood – uncertainty remains.

Supporting Working Families: The budget expands California’s Earned Income Tax Credit to support more working families, including self-employed parents, in line with the federal EITC. In addition, it expands income ranges to help families working up to full-time at the newly increased minimum wage benefit from the program. The expansion makes more than 1 million more households eligible to claim the credit. For the 2015 tax year, almost 400,000 households claimed the credit.

Increasing Money for Schools: Funding for K-14 schools is expected to grow by $3.1 billion over the revised 2016-17 level to $74.5 billion in 2017-18 – an increase of $1.0 billion since January and $27.3 billion over six years, or 58 percent. Schools would receive an additional $1.4 billion next year for the Local Control Funding Formula, which would increase the formula’s implementation to 97 percent complete. The budget also includes a total of $14.5 billion General Fund for higher education, with additional funds provided in the next year to expand capacity for California students at the state’s public institutions, create guided pathways for students to earn degrees and credentials and keep the costs of attendance low for students and their families. Additionally, it holds the University of California accountable for implementing needed reforms to its cost structure so that the system remains sustainable over the long term.

Reducing Pension Liabilities: The budget includes supplemental payments to the California Public Employees’ Retirement System (CalPERS) with a loan from the Surplus Money Investment Fund, a step that is expected to save the state $11 billion over the next two decades while continuing to reduce unfunded liabilities and stabilize state contribution rates. The state will achieve these savings and reduce these liabilities by leveraging existing resources, without the cost or risk of external borrowing.

Repairing Infrastructure: The budget accelerates $2.8 billion toward improving commutes, fixing roads, strengthening overpasses and bridges and building mass transit.

Medi-Cal Funding: California will continue its large investments in the Medi-Cal program – including new revenue from Proposition 56 – to serve millions of people who rely on this program for health care.