Reject Revenue Projections

​  Obernolte Urges Governor Brown to 

LOOK Again at the Budget 

Monday, Assemblyman Jay Obernolte (R-Hesperia) released the following statement in response to the passage of Assembly Bill 93 (Weber), the Assembly’s version of the California State Budget:

“For the last six months I’ve served as a member of the Joint Budget Committee and have worked alongside my colleagues on both sides of the aisle to refine the budget we voted on this afternoon. Unfortunately, while it contains many provisions worthy of support, this budget fails to serve the people of California on a number of different levels.

“First, the budget proposed by the Governor uses a relatively conservative revenue estimate from the Department of Finance (DOF), but the budget bill that the Assembly voted on today uses a much more aggressive revenue estimate from the Legislative Analyst’s Office (LAO) that is over $3 billion higher. This extra revenue comes almost entirely from taxes on capital gains, which is a very unreliable funding source.

“The Standard and Poor’s bond rating agency made the following statement regarding this year’s revenue forecast: ‘The governor's proposal avoids a disproportionate reliance on windfall-like revenues from capital gains to fund ongoing commitments, thus allowing the Department of Finance to forecast budgetary balance beyond fiscal 2016. Insofar as the forecast the DOF produces after the budget is enacted shows the same, we could raise the state's (bond) rating.’ An improved bond rating would likely produce future savings to the State of California, that far exceed the $3 billion in one-time revenue we debated today.   

“Even if the additional capital gains revenue does materialize this year, the extra spending proposed in this budget is not made up of one-time expenditures – instead it seeks to fund new, recurring programs. Even the LAO (on whose projections this bill’s revenue estimates are based) has cautioned us by saying, ‘The Legislature should tread carefully in authorizing new spending commitments given the uncertainty surrounding revenues and the associated fiscal year outlook.’

“By passing this budget today, my colleagues in the Assembly have acted against the recommendation of the Department of Finance, the Legislative Analyst’s Office, the Governor, and the Standard & Poor’s bond rating agency. We have not chosen the path of financial prudence, to the detriment of California families and taxpayers. I urge the Governor to reject these aggressive revenue projections and recurring spending commitments.”