A revised budget: plus: tax proposals and breakfast with Gavin Newsom.

• Author: Allen, Bruce C.
• Position: Capitol Beat

Gov. Brown released his May Budget Revise last month to make spending adjustments to his original spending plan released in January. The revised budget saw a slight increase in the general fund, spending $115.3 billion, with an increase in total state spending to $169 billion.

The bulk of the revisions focus on funding for education, drought response and a new $380 million earned income tax credit for low-income families. The revised budget also pays down long-term state debt and adds to the state's Rainy Day Fund.

The governor acknowledges the state's economic situation has improved significantly over the last two years, but states he will not commit to ongoing spending that put California in the red in the most recent recession. When asked about sales tax on services, Gov. Brown did not think that it was realistic at this time.

The Legislature has until June 15 to review and approve this proposed budget option, or attempt to come up with a viable alternative that the governor sees fit.

Tax Proposals the Talk of the Town

Taxes remain one of the most discussed topics in Sacramento. Even though the state's economy is improving, much of the state's budget stability has been based on revenues raised from the recently passed Proposition 30 temporary tax increases set to expire in the next few years.

The statewide sales tax increase will expire at the end of 2016, and the income tax increase will expire at the end of 2018. Once these temporary taxes come off the books, a large part of the state's budget revenue will no longer be available.

Conversations around the Capitol are already speculating that interest groups reliant upon funding from the state budget will be exploring options to backfill the Prop. 30 revenue that will disappear. Most of these options center on a ballot initiative for the 2016,2018 or possibly 2020 ballot.

The expectation is that a presidential (2016) and a gubernatorial (2018) election will bring large number of voters to the polls that will be sympathetic to the cause.

One proposed option is to extend the Prop. 30 tax increases, or some variation of them, for another period of time--or potentially make them permanent.

Voters have had mixed reviews about this proposal with some feeling that the tax increases should continue to help stabilize the budget, while others feel that making a temporary tax increase permanent is disingenuous.

Another proposal gaining support from a coalition of public employee unions is to make...