January 11, 2018

Governor Brown has issued his proposed State Budget for the upcoming fiscal year which begins next July. Money is included in the proposed Budget for employee compensation items such as health plan premium increases and the state’s share of prefunding retiree health plans.  Four of the 21 State Bargaining Units will be negotiating new contracts this spring, including PECG for Unit 9.

The Governor’s message was more optimistic than usual. While urging restraint in spending due to a potential economic downturn, the impact of the new federal tax package, and future uncertainties, he reported a “healthy one-time surplus”. His proposal would add an additional $5 billion to bring the “Rainy Day Fund to 100% of its constitutional target” of $13.5 billion in total. He also reported that the $35 billion “Wall of Debt” from several years ago is now down to $6 billion. On the other hand, retirement plans have an unfunded liability of $272 billion, which is being addressed through a variety of methods.

Deferred maintenance on existing state infrastructure is $67 billion. Last spring’s Senate Bill 1 provides $55 billion in new transportation funding over ten years, including $4.6 billion in the upcoming fiscal year. Another $1 billion for natural resources infrastructure in 2018-19 will be provided if voters approve a ballot measure next June to authorize $4 billion in bonds.

For transportation, as the increased funding began in November, $5 billion in transportation projects, plus an additional 60 bridge projects, have been advanced. Transportation Agency Secretary Brian Kelly commended Caltrans for their work, also noting the department will have an increase in staff to expedite these projects.