(Bloomberg) -- California Governor Jerry Brown unveiled a $137.6 billion budget Friday that would use a $9 billion surplus to pad the state’s rainy-day fund and cover one-time boosts to spending for infrastructure and addressing homelessness.
The surplus has grown from $6 billion projected in the governor’s initial $131.7 billion budget in January for the year that begins in July. The term-limited governor is directing most of the $9 billion surplus to savings, saying that a recession is bound to happen. This year’s plan spends $127 billion.
“I’m trying to leave the most responsible budget I can for the next governor," the Democrat said at a briefing in Sacramento. "I’m reluctant to embark upon programs that would continue and grow into the future."
California draws a large share of taxes from wealthy residents whose incomes are tied closely to the stock market. The top 1 percent of earners account for nearly half of the state’s personal income-tax collections. That can lead to sharp declines in revenue during economic or stock-market downturns. California grappled with billion-dollar deficits for five straight years starting in fiscal 2009.
Brown, who took office in 2011 while the state was still reeling from the effects of the recession, has been building up a cushion for future downturns. He is proposing boosting the rainy-day fund to its maximum of 10 percent of tax revenue, which would be $13.8 billion. The fund holds $9.4 billion this year.
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