Jerry Brown

California Governor Jerry Brown

By David Siders
Published: Tuesday, May. 14, 2013 – 5:07 pm
Last Modified: Wednesday, May. 15, 2013 – 8:02 am

Gov. Jerry Brown, dismissive of a surge in state tax revenue that stirred optimism at the Capitol, moved Tuesday to blunt appeals for increased spending, downgrading his budget proposal from January.

The budget revision – an annual exercise opening a month of negotiation with the Legislature – threatened to strain Brown’s relationship with Democratic lawmakers and with social service advocates who called Brown’s estimates overly conservative and who are lobbying to restore programs cut during the recession.

“He’s definitely trying to strike a tone,” said Jeffrey Michael, director of the Business Forecasting Center at University of the Pacific.

He said Brown’s estimates, though “very conservative,” are in line with the Business Forecasting Center’s projections.

Despite income tax revenue running about $4.5 billion ahead of expectations through April, Brown said much of that money is unlikely to carry over into future years. He is projecting revenue next fiscal year down $1.8 billion from his January estimate.

The Democratic governor said economic growth will be slower than he previously thought because of federal spending cuts and a higher payroll tax on workers.

“Four percent growth has now become 2 percent growth,” Brown said.

He also said much of the income tax revenue increase the state enjoyed this spring will not be lasting, attributing the rush instead to wealthy taxpayers shifting income from 2013 into 2012 to avoid higher federal tax rates. Administration officials said they also expect tax revenue in the final two months of the budget year, May and June, to fall below original estimates.

Brown said California has “climbed out of a hole” with the passage of his November ballot initiative to raise taxes but that “this is not the time to break out the champagne.”

Republican lawmakers immediately praised Brown. Assembly Budget Committee Vice Chairman Jeff Gorell, R-Camarillo, said it was “appropriate for the governor to have conservative revenue projections,” while Assembly Republican leader Connie Conway, R-Tulare, called Brown “the adult in the room” and predicted the most meaningful fault line in the coming budget debate would run through the Democratic caucus.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, said in a prepared statement that Brown’s revenue projections would be subject to a “deeper analysis,” suggesting a potential dispute about how much money is available to spend.

“I agree we must aggressively pay down our state’s debt and set aside money for a reserve, but there’s a disappointing aspect to this proposal,” Steinberg said. “It’s important that we also begin making up for some of the damage done to tens of thousands of Californians. Unless the Legislative Analyst has a different conclusion, the governor proposes few if any resources to restore cuts made over the past few years to the courts, and to health and human services.”

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