It was a State of the State full of historical quotes, quirky moments and a bit of humor. The presentation to both houses of the Legislature started with a chuckle when Senator Steinberg accidentally introduced Lieutenant Governor Newsom as the former mayor of Sacramento rather than of San Francisco. The Lieutenant Governor handled the stumble with his usual aplomb and then charmed the audience with some great one-liners. Also, Governor Brown introduced a new prop during his speech (more on that under fiscal discipline).

Summary:

In his less than 30-minute speech, the Governor reinforced how well his three-part plan of paying downdebts, fiscal discipline, and local control is working and expressed his intention to do more of the same. He also seemed to be reminding the Legislature that he wasn’t going to be deterred from continuing with his plan.

He began by noting that California is in a comeback with 1 million new jobs, a “budgetary surplus in the billions,” and a minimum wage that is rising to $10 per hour. The major topics discussed were the budget, long-term liabilities, fiscal discipline, his subsidiarity principle (using Local Control Funding Formula (LCFF) and prison realignment as examples), water and climate change. See below for details on each of the major topics. After discussing his top priorities, Brown gave cursory honorable mentions to Silicon Valley, health care, High Speed Rail, electric vehicles, and biotechnology. Finally, he closed with the line that we need to “build for the future, not steal from it.”

State Budget:

On the state budget, Brown noted that changing the budget vote requirement from two-thirds to a majority vote (Prop. 25) and the temporary tax increase (Prop. 30) has made all the difference in balancing the budget. He explained that the state is still paying down debts and he specifically outlined four long-term liabilities: (1) pension obligations of more than $100 billion for state workers, teachers, and judges; (2) health care for retirees; (3) infrastructure; and (4) future risks like revenue fluctuation, Congressional/federal actions, natural disasters, and the Affordable Care Act.

Fiscal Discipline: Brown began with a biblical quote supporting his plan to put away the state’s surplus (he did not use the term “rainy day fund”). He reiterated his goal of paying down debt and this is where it got interesting. Brown used aprop – a customized playing card. On one side was a bar chart illustrating recent budget years in red and black with the quote “Those who do not remember the past are condemned to repeat it” (George Santayana). On the other side was a picture of Sutter (the First Dog) saying (barking?), “Bark if you don’t like deficits.”

Subsidiarity Principle/LCFF:

Governor Brown reinforced his subsidiarity principle – state government should be subsidiary to local government. He noted that there is no greater example of subsidiarity than LCFF, and that teachers and administrators are the ones that can make it work. He noted that 324 people spoke at the recent State Board of Education hearing (he seemed to use this to highlight locals beingactively engaged, that he is sticking with local control, and to counter a push by the Legislature and equity groups for more state control). He reminded them that under LCFF, those with less will receive more and that LCFF recognizeslow-income families and students for whom English is a second language. LCFF sets general goals for schools and puts the responsibility for meeting those goals on local school boards because the state cannot and should not micromanage schools. He noted that it was up to each district to address the goals in their own way. He also recognized LCFF and Common Core will bechallenges for teachers and administrators, but said he was confident that locals are up to it. The Governor closed this topic by saying, “Life is local. You can’t control it, only live it.”

Water/Climate Change:

Calling the drought a “stark warning of things to come,” the Governor also expressed concern over less snow pack and more wildfires. He noted a need to reduce oil consumption and that we must partner with other countries. Hementioned that we were already partnering with China and that he would approach Mexico next.

Conclusion:

Governor Brown used his speech to note progress already made and encourage support for continued success; but more so to reiterate that he would continue to focus on the areas mentioned in the speech, particularly paying down debt, maintaining fiscal prudence, and implementing LCFF. It is clear that local control will be the lens through which all will be viewed.

Kevin R. Gordon, President
CAPITOL ADVISORS GROUP, LLC.
925 L Street, Suite 1200
Sacramento, CA 95814
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