Today Gov. Jerry Brown signed off on an “honest, balanced and on-time budget” (in his words) following a bit of a falling out with the legislature earlier this month (which I chronicled in this blog). The California legislature, with only the Democrats voting in favor, approved a revised state budget two days ago. The legislators will now be getting their paychecks again and everybody, except the Republicans of course, appear to be happy.

To address the state’s $26.6 billion deficit, Gov. Brown had hoped to extend some soon-to-be-expired taxes, but when that didn’t happen the Democrats had to find $15 billion more in cuts on top of what already has been slashed.

State government commissions and agencies were hit hard, but the cuts made fiscal sense. Gov. Brown says that general fund spending now is at its lowest level since 1972-73.

And with tax revenues rising recently, the budget reflects a careful analysis of its use based on reality (instead of hope). For example, based on current incoming tax revenue, the state could see an additional $4 billion by the end of the year; if it doesn’t, additional cuts to education and services will be made to make up the difference. Specific cuts are outlined in a tier system based on how much revenue actually comes in.

The AGC of California, however, fired up its crystal ball to see what could happen in the future, and it may not be so rosy: Will the revenues materialize, or will the “January Joust” occur? Will redevelopment agencies, essentially eliminated in the budget, be successful with their planned lawsuit ($1.7 billion in revenues at stake)? Will anybody sue over the Prop. 98 gimmickry that relies on a shift of sales tax revenue to local government as a way to recognize new revenue while ignoring the formula that would ordinarily require about 40% to go to K-14?

The AGC says the only way anybody wins with this budget is higher or new revenues. This would avoid or soften the triggered cuts Democrats would hate and would allow Republicans to return to the time-honored argument that lower taxes drive higher tax revenues.

In the governor’s May budget revise, the AGC says it was clear that there would be no further transfers of transportation funds to help aid the general fund. This was largely due to AGC and California’s transportation stakeholders who successfully lobbied for the passage of the Gas Tax Swap re-enactment, signed by the governor in March.

“While the construction industry seemed to fair well in the budget package, it is still premature to assume that the state budget and its credit rating would be suitable for bond sales this summer,” says Tom Holsman, AGC of California’s CEO. “If the economic downturn continues and revenues don’t materialize, additional cuts will be imposed that could jeopardize the industry.”

As I mentioned last week, nearly 800 Caltrans construction projects worth $10.6 billion would have been in jeopardy if the budget wasn’t signed before July 1.
The largest state transportation department in the nation also made out pretty well in the final budget, with no major spending cuts planned and its annual budget of $14 billion remaining intact, at least for now.

Speaking of Caltrans, the San Diego Highway Development Association has set up a donation program to help the families of the three Caltrans maintenance workers who were killed in highway accidents in the past seven weeks. All three workers were from Caltrans District 11.

Three separate memorial funds have been set up for the families through the California Transportation Foundation. Contact CTF via its website or send tax deductible contributions directly to: CTF, 581 La Sierra Drive, Sacramento, Calif. 95864.