Jerry Brown’s legacy in California: Fiscal battles, environmental fights

While Brown has focused on climate change during his final term, he will also be remembered for bringing the state back from the brink of financial disaster. California had the lowest rated credit among the 50 states starting in early 2009 and it continued into 2010.

“When I took office way back in 2011, California was facing a real financial mess — a deficit of $27 billion,” Brown said earlier this year when he signed his last annual state budget, a $201 billion plan with a projected $9 billion surplus.

To restore the state’s fiscal footing, Brown made cuts to programs and services. He slashed his own office staff by 25 percent, and pushed for voters to approve a mix of sales and state income tax extensions.

“He made some very tough decisions to bring California from the precipice of fiscal demise,” said former LA County Supervisor Zev Yaroslavsky, director of the Los Angeles Initiative at the UCLA Luskin School of Public Affairs. “The last four years were maybe a little easier because the economy did finally turn around and he was able to build the state back up.”

Statewide unemployment topped 12 percent when Brown was elected to his third term in 2010. As the outgoing governor leaves office, the jobless rate in November 2018 stood at 4.1 percent, unchanged from the prior month.

Among the industries showing the biggest change in hiring in the past year are professional and business services, construction as well as information sector, which is top heavy with entertainment jobs along with telecommunications and tech-oriented jobs in Internet search and social media firms.

The state’s job growth rate has consistently outpaced the nation’s rate since early 2012, on a year-over-year basis.

Brown leaves as California is forecast to have about $14 billion in the state’s rainy day fund for the next economic downturn, as well as billions more in surplus. Yet that reserve fund may not be enough in the next recession.

According to a state report released in March, “a moderate recession, like the dot-com bust, could lead to a $40 billion budget problem. A more mild recession might result in a $20 billion budget problem.”

In recent years, Brown has emphasized the need for the state to sock away money for the rainy day fund even as some legislators applied pressure to spend the budget surpluses.

A recession could happen under the watch of the incoming governor, who also will have to deal with the state’s highly volatile revenue system. The top 1 percent of income tax earners in California generate almost half of the personal income taxes in the state.

Meantime, Newsom will take the reins of state government next month when California is enjoying a booming economy, but there are signs of job growth cooling and fallout from the Trump’s trade war has hit several major industries in the state, from agriculture and electric cars to steel and aluminum. Newsom ran a campaign focused on ambitious plans for everything from single-payer health care and affordable housing to childhood poverty.

It still remains to be seen whether Newsom pushes for a major increase in spending when he’s governor to pay for some of his ambitious agenda. He also faces a Democratic-controlled state Legislature that appears more willing to spend.

About 100 bills with more than $40 billion in new spending were proposed in the first 24 hours of the new state’s legislative session, according to the Sacramento Bee. The Democrats have a two-thirds supermajority in both houses of the state Legislature so they have the power to pass new taxes or overrule a governor’s veto.

“We’re nearing the longest recovery in modern history, and as Issac Newton observed: What goes up must come down,” Brown said in May during a press event on his revised budget. “This is a time to save for our future, not to make pricey promises we can’t keep. I said it before and I’ll say it again: Let’s not blow it now.”

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