California Governor Jerry Brown released a revised budget Friday and kicked off a month of negotiations to pass a final version. The Assembly and Senate have until June 15 to deliver a budget acceptable under the state constitution. If for any reason they are late, the lawmaker’s pay will be docked.
Usually, budget mistakes are not broadcasted in a news conference, especially when the faux pas is as big as this one. Then again, if it provides a chance for Governor Jerry Brown to be in front of the camera, all normalcy goes out the window. Add to that the bonus of a public platform to trash President Trump and Republicans, and, well, that is a dance Mr. Brown would never turn down.
GOVERNOR BROWN RIDICULES REPUBLICANS
During the press conference, the governor threw jabs at the state’s Republican members of the House for their unanimous vote to repeal the Affordable Care Act, a move he says will result in California losing $18.6 billion in federal funds a decade from now. He went on to say, “They weren’t sent to Congress just to take orders from that crowd, or from Donald Trump, and I think they made a mistake, and they’re going to have to do penance for it.”
Brown’s revised budget projects approximately a $9 billion surplus, up 3 billion from the amount posed in January, and he wants all but $300 million to be put into reserves for a “rainy day.” He stated that “it's just a prediction, it is not real until the money is in the bank.” Also, in response to the pressure from state legislatures and special interest groups to boost funding on a variety of priorities, Governor Brown said: “Life is very giddy at the peaks, but I am not giddy.” Okay so then why, in a public forum, announce the change in estimate, especially on revenue, only to hold it back from your constituents? It is like waving a red flag in front of a bull.
The profession of accounting is governed by general rules called basic accounting principles and guidelines. The principle of conservatism gives guidance on how to record uncertain events and estimates. The rule states that you should always err on the conservative side of any transaction. This means minimizing profits by recording uncertain losses and not recording uncertain surplus. It is not surprising that the Democratic Governor does not adhere to conservativism, but it does make those of us in the accounting profession wonder about those who advise him.
CALIFORNIA IS IN A STATE OF CHAOS
Brown has been criticized for not acting more quickly to add funding to deal with the enormous problems that currently face California. The state is in dire need of funds to address out of control homelessness, mental illness, and drug addiction.
California is in a state of chaos and lawmakers have their work cut out for them. California has approximately 12% of the nation’s total population, but 25% of the homeless – 20% of the state’s population. They spend almost as much for prisons as higher education. The gas tax hike increase that took effect in April of 2016 has residents infuriated; very little of the money collected has gone to improve decaying roads, highways, or bridges as promised. Texas can build five miles of road for the cost of one California mile. It makes one wonder why lawmakers do not cut out sanctuary cities and follow federal law regarding illegal immigration.
Although, maybe that is a good thing for the Republican Party. This type of habitual behavior in the Democratic leadership might be one of the many things threatening to turn parts of the state purple – if not crimson.
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