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Proposed Calif. budget includes more health spending, deal on insurer tax

Gov. Jerry Brown proposed a sweeping $122.6 billion budget plan for California on Thursday that includes billions more in spending for education, healthcare and state infrastructure, increases the state rainy day fund to $8 billion and takes steps to pay down debts.

"Relative to budgets of the past, this budget is in good shape," Brown said of his 2016-17 spending plan. "We also ought to look at what's the capacity of the state, and what's the taxpayer willingness to spend more."

The spending plan also includes a $1.1 billion compromise on a new tax on health insurers to replace one that will expire in June. Brown said the tax is critical to maintaining the state healthcare program for poor people.

The budget would keep tuition flat for another year at University of California and California State University schools, while a voter-approved minimum funding guarantee will send funding for public schools soaring along with state tax revenues. About 40 percent of general fund revenues is earmarked for K-12 and two-year community college education. Per-pupil spending would increase to $10,591 under Brown's plan.

Brown, a Democrat, said soaring tax revenues allow the state to boost spending on programs, but he also warned of the boom-and-bust cycle, proposing to put an additional $2 billion into the rainy day fund.

Republicans cautioned against expanding social welfare programs that will require long-term funding. Assembly Minority Leader Chad Mayes, R-Yucca Valley, said the state must not spend money "as if it will reappear every year."

"Democrats should pay attention to the legislative analyst and Governor Brown's warnings about overspending, and balance the need to invest in critical infrastructure projects to improve our roads, schools and dams with one-time money," Mayes said in a statement.

The budget announcement sets the stage for a months-long debate with lawmakers over spending priorities. Despite the large spending increases, Brown acknowledged there is not money for everything on lawmakers' wish lists.

"It's not a candy store where you can pick out whatever you want," he said.

Legislators already have been staking out their own positions, including funding to help homeless people, expanding services for the developmentally disabled and creating more early education slots.

Medi-Cal, the state's healthcare program for the poor, now has 12.6 million enrollees, presenting a growing strain on state coffers. Advocates have been pushing the state to raise reimbursement for doctors who provide care in the program, which was cut by 10 percent during the recession.

"We are now years past the recession, but Californians are still living with recession-era cuts to health and human services," said Anthony Wright, executive director of the consumer advocacy group Health Access California.

Brown called special sessions last year to address the healthcare tax and a $59 billion backlog in transportation infrastructure spending, but neither gained traction. He said Thursday that he'll get more involved in talks with lawmakers on both issues this year.

He said his administration has been deep in talks with health insurers to come up with a fair proposal to plug the $1.1 billion healthcare hole. The plan still needs Republican votes.

"We'll get whatever people think is right. It takes a few Republicans to join in with the Democrats," he said.

The budget plan also reflects Brown's transportation proposal to spend $3.6 billion a year on infrastructure improvements, funded through a combination of vehicle registration fees, increases to the diesel and gas taxes, and diverting money from the fees charged to polluters.

Republicans have rejected tax increases, arguing that the state should instead return diverted transportation money and make major cuts to Caltrans.


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