Governor Brown releases his new proposed budget with a lot of question marks. County supervisors hear from the public as they improve a plan to increase salaries. This is KPBS Midday Edition. I'm Maureen Cavanaugh. It's Tuesday, January 10.'s back -- Katie Orr is on the line as she was at Governor Brown's release of his proposed budget for 2017-18 today. Here is what he said. It's another reason though I will the legislature has to be prudent. There are too many uncertainties that could put a massive hold in our budget expectations. That's another argument to be prudent. It's a wonder to $22.5 billion proposed budget. There are more than the usual amount of unknowns in this year's revenue stream along with the warning of a $2 billion deficit. A lot of what the state can and cannot do this year depends on what happens in Washington under the new trumpet in a station. Katie Orr, politics and government reporter at KQED is on the line. Welcome. What would you say was the overall theme of this budget announcement? I think the governors soundbite just summed it up. Fiscal prudence is what he was stressing. He said several times that we are in very uncertain economic times right now in the state simply can't afford to take on new commitments and new spending. He has said that without taking action as he plans to do or proposes to do. The base -- state could face a $2 billion deficit this year. Very uncertain economic times is his message. What does this say about the status of the California economy? He has said that revenues have been projected to be lower than we had originally thought. His budget says they have revised it down $6 billion in revenues from previous forecasts. He emphasized the uncertainty of California's economy as you and I'm sure the listeners know our economy is based on volatile taxes he said that is good. It counts on wealthy people to pick up more of the tab but it's bad and that if the stock market goes down the revenues goes down. He is projecting that will happen sooner rather than later so this data has to be careful right now. What did Governor Brown has to say about healthcare and the possibility of California losing money from Washington? He was questioned about president-elect Trump on health care and other issues. You said you cannot really take anything into account because nothing has happened. You can't make budget decisions based on unknown information. He said they are going to watch what term does very carefully, having discussions about what the state could do to shield itself. At this point he is not anticipated the actions he will take because he doesn't know what is going to happen. He was explicit about the expansion of Medicare and how how that goes away if a certain percentage of federal dollars go away. If the Affordable Care Act is eliminated it's estimated California would be left with the 15 billion $15 billion tab to make up for that. That's a huge portion of the states budget. Especially if there is a recession it's unlikely that the state would be able to pick that up. Another big issue for the state we've heard a lot of discussion about this, affordable housing. What does this budget say about that. This budget doesn't do much for housing much I'm sure to the disappointment of advocates who thought this might either year. The budget, in order to counteract the deficit, takes away $400 million that he had allocated last year for affordable housing. That money hadn't been spent because it was dependent on a solution in the assembly and Senate which didn't happen last year. This money was just sitting there. And now it's gone under his proposal. Not only does affordable housing not get new money, they actually lost some of the money they were hoping they would get. That's one surprise in this announcement. Any other surprises that popped outage you? It does make a commitment to keep funding transportation. He is putting forward a plan that would put $4 billion a year towards fixing the state roads and bridges and increasing public transit. That is a goal that matches some of the priorities in the Senate and assembly. Both houses have put forward similar bills in this year, Democrats have a two third majority so they don't need this -- Republican support. That is something we could see, a budget proposal we could see moving forward. I've read this year the main revised, the budget gets retooled because of new revenue information, that should be more important than ever this year because by that time we might know which way the wind is blowing in Washington. Absolutely. We will have much more certainty about what the Trump administration plans to do. We will know more with more certainty, whether or not the Affordable Care Act will be repealed. Various policies related to taxes, that is definitely something to keep an eye on. I've been speaking with Katie Orr, politics and government reporting at KQED. Thank you so much. You are welcome.
California Gov. Jerry Brown proposed a $122.5 billion state spending plan Tuesday and warned of a looming $2 billion deficit because of falling tax revenues.
The proposed budget was announced as the state faces uncertainty about changes to come from President-elect Donald Trump and the Republican-led U.S. Congress.
Trump has pledged to repeal President Barack Obama's health care law, which California has embraced by enrolling about 5 million people in private health insurance or publicly funded Medi-Cal coverage. The budget assumes policies remain the same, but Brown noted the federal uncertainty is yet another reason to maintain the fiscal prudence for which he consistently advocates.
"If they do go down that road, it will be extremely painful for California," Brown said.
About 1.4 million people signed up for coverage last year through Covered California, the insurance exchange created under the Affordable Care Act.
Nearly 90 percent received federal subsidies that would go away under previous GOP proposals to repeal "Obamacare." Another 3.8 million people with low incomes joined the Medi-Cal program, with 95 percent of their costs paid by the federal government, amounting to about $15 billion in subsidies during the current fiscal year.
Brown's proposal is his opening salvo in six months of spending negotiations with lawmakers.
He did not depart from his tradition of pushing to avoid long-term spending commitments that he says would have to be cut during the next recession. He pointed to lower-than-expected state revenue, uncertainty over Trump's policies and likelihood of a recession in the near future as reasons for caution.
His position sets up a potential skirmish with Democratic legislative leaders, who prefer to use the state's growing revenue to expand funding for higher education, social services and other state programs.
Brown's spending proposal remains the same as the current $122.5 billion 2016-17 general fund budget, but reflects cuts because inflation causes spending to generally rise each year.
The Democratic leaders of the Assembly and Senate budget committees, Assemblyman Phil Ting of San Francisco and Sen. Holly Mitchell of Los Angeles, say California should continue spending on important programs rather than act out of fear of uncertain policies from Washington.
The nonpartisan legislative analyst, Mac Taylor, released his budget forecast in November, projecting the state would have a $2.8 billion surplus after accounting for the higher cost of delivering state services for another year.
Taylor's office says the three biggest sources of state tax revenue were $1.4 billion below projections in the first half of the current fiscal year. Year-end taxes aren't fully accounted for and could still rebound.
The shortfall, which can be absorbed by budget reserves and would not require cuts, is due largely to lower-than-expected personal income tax revenue.
