Two things are going to happen in the state capitol in January. 

The first is the Legislature coming back to town for the second half of its 2017-2018 session. The members of the General Assembly and the State Senate will start introducing some of the nearly 3,000 pieces of legislation that they want to promote out of their understanding of the needs of the citizens, or the requests of lobbyists.

The good news is that only 700 or so will pass and be signed by the Governor. The bad news is that we don’t, today, know which ones will fall into the California Code books that line lawyer’s libraries.

The second thing that will happen is that Governor Jerry Brown will introduce his first take on the state budget for fiscal 2018-19, that, by the state constitution must be passed by June 15th.

We don’t know what’s in that document either, but we do know that the governor, his staff and key legislators met in December. Few outside of Sacramento realizes that some of the most important state budget decisions happen just before Christmas, in private meetings where the governor signs off on the spending plan he will present to the Legislature in early January.

The Inside Scoop

Assembly Budget Chairman Phil Ting (D-San Francisco) was able to roll out a lengthy list of budget priorities in the week before Christmas, which looked a lot like a trial balloon for the Governor’s spending plan.

The first priority is to fill up the state “rainy day fund” to the tune of $3 billion more, bringing the fund up to something like $9 billion. That isn’t enough to cover the entirety of state spending (estimated at $183 billion for this year) but it could provide a life preserver for essential services if we slide back into recession.

Since the Democrats still enjoy a “super majority” in both houses, the only new spending will come from their conference. Ting’s list includes raising the state’s earned-income tax credit for the working poor; restoration of cost-of-living increases for the aged, blind and disabled and putting more money in California’s middle-class scholarship program, plus a tuition-free year for first-time students in local community colleges.

To pay for it, the state is expecting to harvest seven to ten billion in increased taxes from the raging stock market. What irony—the big market increase since November is known on Wall Street as the Trump Bump.

By Dave Sorem, P.E. ECA Government Affairs Chairman