How The CA Budget Spends More Without Spending More

The new California budget that just took effect added hundreds of millions of dollars of funding for child care, welfare and affordable housing, but the state calculates total spending is lower than Governor Jerry Brown proposed in May.

Former state fiscal analyst Steve Boilard directs the Center for California Studies at Sacramento State. He says it’s not magic—the state is paying down less debt.

"The analogy I’d use is your credit card," Boilard says. "If you pay less on the credit card next month, it means your balance is going to be larger than it otherwise would, and you’ll pay more in interest over time than you otherwise would."

The governor wanted to pay down retiree health debt using the General Fund--like paying higher than the minimum balance required on a credit card. The budget instead pays it using Proposition 2 debt funds, using money that would otherwise have paid down additional debt.

Brown also proposed spending $250 million from the General Fund to construct jails. Instead, the state will take out bonds. That future spending doesn’t count in this year’s budget, but they’re added to the state credit card.

"Perfectly legitimate thing to do," says Boilard. "But I would view it as spending more money than the original proposal."

Those cost shifts aren’t huge in the context of a $170 billion dollar budget, but they do show how the state can spend more, without spending more.