California Ends Decade of Deficits as Governor Signs New Budget

Thursday, 27 Jun 2013 05:37 PM

 

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California ended a decade of budget deficits on Thursday as Governor Jerry Brown signed a $96.3 billion general fund budget that includes a surplus and modestly increases spending.

The budget is based on a deal struck earlier this month by Brown and fellow Democrats who control the legislature. It is the third consecutive on-time budget he has signed – a sharp contrast to the routinely late budgets during the previous decade.

The spending plan for the 2013-14 fiscal year beginning on Monday marks an increase from the current fiscal year's $95.7 billion general fund budget and includes a surplus of $872 million and an emergency reserve of $1.1 billion.

The budget provides more money for education, dental and mental health programs, and it expands coverage under the federal health-care overhaul. The budget also repays internal loans used to balance the state's books over the years. That debt is on track to drop below $5 billion in the 2016-17 fiscal year from $26.9 billion, according to budget's summary.

It reflected Brown's cautious outlook for the state's finances, pointing to "substantial" risks and liabilities while "The budget remains balanced only by a narrow margin."

Standard & Poor's analyst Gabriel Petek said the budget shows California's finances are on stronger footing. But he said it is uncertain the state can sustain revenue gains that helped propel it to a budget surplus. S&P in January upgraded its rating on $73.1 billion of California's general obligation bonds one notch to A from A-minus and put a stable outlook on the state.

© 2014 Thomson/Reuters. All rights reserved.

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