California to post $851m budget surplus
California is poised to end its next fiscal year with an $851m surplus, the first in more than a decade, Governor Jerry Brown said as he unveiled a budget that includes revenue from voter-approved tax increases.
Brown’s spending plan assumes the state will receive more revenue from the elimination of redevelopment agencies than the independent Legislative Analyst’s Office projected in November when it forecast a $1.9bn shortfall.
Bloomberg News reported on Thursday, that Brown also expects to slow repayment of internal borrowing from special funds.
The governor, a 74-year-old Democrat, won office in 2010 on a vow to repair the crippled finances that plagued the world’s ninth-biggest economy as lawmakers papered over $200bn of deficits in the past decade.
“I am determined to avoid the fiscal mess that previous governors struggled with,” Brown said today at a news briefing in Sacramento.
Californians in November granted Brown the highest statewide sales tax in the United States, at 7.5 per cent, and boosted levies on income starting at $250,000 — reaching 13.3 per cent on those making $1m or more, the most of any state.
“We are not going to play the game of spending money we don’t have,” the governor said. “We have fixed it.”
Brown said the surplus could be at risk from federal deficit actions, a delay in the economic recovery or increasing health-care costs.
The surplus contrasts with a $15.7bn deficit that Brown and lawmakers had to fill in the current year and a record $42bn in 2009, when a political battle over how to erase the gap forced the state to issue $2.6bn of IOUs to pay bills during the impasse.
The surplus may have broad implications for the state’s lagging credit rating, and thus its cost of borrowing.
Standard & Poor’s, which last upgraded California in 2006, revised its outlook to positive in February.