For the first time in about a decade, with the exception of the economic shutdowns related to COVID-19, California lawmakers and the governor are bracing for a significant budget deficit. In a presentation where Gov. Gavin Newsom typically wears a suit and tie to propose future investments, the governor Tuesday walked up to the podium in cargo pants and a zip-up to address how the state should be cutting back its spending. Tuesday’s budget presentation is the first step in a six-month-long negotiation process between the governor and state lawmakers, as they work to nail down the state’s spending priorities by June 30. Here are some of the takeaways from his presentation. The $22.5 billion budget gapNewsom’s administration projects he and state lawmakers will need to fill the multi-billion-dollar hole. The gap is a result of the state’s wealthiest taxpayers not contributing as much to state revenues as expected because of an underperforming stock market, layoffs in the tech industry, the war in Ukraine, persistent inflation and other economic factors outside of the state’s control. Anticipating a potential shift in its economic situation, coupled with state spending laws, state lawmakers and the governor last year agreed to use the state’s nearly $100 billion budget surplus to deposit a chunk into the state’s budget reserves and on one-time spending programs to avoid over-committing on ongoing spending. Some of those one-time programs included the Middle-Class Tax Refund, which the state has been distributing since October. To fill that budget hole, the governor said most of the state’s biggest programs are safe including public education, the state’s response to wildfire, drought, flood and homelessness. The governor said California’s expansion of access to health care to undocumented people won’t be touched and new CARE Court branches are slated to still go into effect. Modest reductions would be made to the state’s housing-related budget, while most reductions would impact zero-emission vehicle programs by the hundreds of millions of dollars, along with transportation, the governor said. State Sen. Scott Wiener, D-San Francisco, said the cuts are very problematic. “When you have a severe funding problem at a public transportation agency, it may cut service, which then reduces ridership, which causes even more cuts; we call that a death spiral. We need to prevent that from happening,” Weiner said. Addressing the state’s homelessness crisisThe governor said some of the state’s biggest priorities will not see cuts. As far as the state’s response to homelessness, the governor is proposing to provide an additional $1 billion to city and county governments to confront the issue. This comes months after the governor threatened to withhold funds from local governments across the state because their homelessness reduction plans weren’t aggressive enough. Newsom told reporters Tuesday that he will request the Legislature to put measures into state law that would hold cities and counties accountable for reducing homelessness and increasing housing. “Our vision is realized locally,” Newsom said. assembly Luz Rivas, D-San Fernando Valley, tweeted Tuesday: “I’ve been working with advocates over the interim to develop strict accountability and ongoing funding. We need both to make true progress, and I will be introducing legislation that does just that. ” Confronting Opioid and Fentanyl issuesThe governor proposed investing $97 million in new investments to combat the issues with fentanyl and opioids seen across the state and country. Those investments include dollars for a Naloxone distribution project, grants for recovery and testing, and overdose medication for middle and high school students. “Whatever our schools need, anyone who needs them will be provided,” Newsom said. Several proposals have been filed this legislative year to address the issue, including Assm. Joe Patterson, R-Granite Bay, who wants to require schools to always have Naxolone on hand. Money for controversial oil drilling lawThe governor’s budget proposal includes $54.2 million over the next two years to implement a new law that would prohibit oil drilling near schools, parks and communities. That law is currently tied up in court, as opponents of the measure seek a referendum against it. Kobi Nasceck with environmental advocacy group VISION said in a statement in part, “It’s a clear message to Big Oil not to mess with our democracy. The oil industry may be throwing every dirty tactic from their playbook to undo policies that protect public health, but this budget is one step closer to a permanent statewide setback.” Changes to funding strategy at the southern border Last month, the governor said California had spent $1 billion over the last three years funding services and resources for migrants at the southern border, which he said the state could not continue doing in anticipation of the budget shortfall. Newsom said that was still the case as of Tuesday. He said the state has been spending money on medically focused sites for COVID-19 testing and vaccination for migrants. That will eventually be phased out because Newsom said it won’t be necessary. Newsom said the focus going forward will be to invest in the most vulnerable. “Even in that strategy, there are concerns around a post-Title 42 world,” Newsom said. The governor said he’s encouraged by recent conversations he’s had with the Biden administration that give him confidence the federal government will make resources available.
SACRAMENTO, Calif. —
For the first time in about a decade, with the exception of the economic shutdowns related to COVID-19, California lawmakers and the governor are bracing for a significant budget deficit.
In a presentation where Gov. Gavin Newsom typically wears a suit and tie to propose future investments, the governor Tuesday walked up to the podium in cargo pants and a zip-up to address how the state should be cutting back its spending.
Tuesday’s budget presentation is the first step in a six-month-long negotiation process between the governor and state lawmakers, as they work to nail down the state’s spending priorities by June 30. Here are some of the takeaways from his presentation.
The $22.5 billion budget gap
Newsom’s administration projects he and state lawmakers will need to fill the multi-billion-dollar hole. The gap is a result of the state’s wealthiest taxpayers not contributing as much to state revenues as expected because of an underperforming stock market, layoffs in the tech industry, the war in Ukraine, persistent inflation and other economic factors outside of the state’s control.
Anticipating a potential shift in its economic situation, coupled with state spending laws, state lawmakers and the governor last year agreed to use the state’s nearly $100 billion budget surplus to deposit a chunk into the state’s budget reserves and on one-time spending programs to avoid over-committing on ongoing spending. Some of those one-time programs included the Middle-Class Tax Refund, which the state has been distributing since October.
To fill that budget hole, the governor said most of the state’s biggest programs are safe including public education, the state’s response to wildfire, drought, flood and homelessness. The governor said California’s expansion of access to health care to undocumented people won’t be touched and new CARE Court branches are slated to still go into effect. Modest reductions would be made to the state’s housing-related budget, while most reductions would impact zero-emission vehicle programs by the hundreds of millions of dollars, along with transportation, the governor said.
State Sen. Scott Wiener, D-San Francisco, said the cuts are very problematic.
“When you have a severe funding problem at a public transportation agency, it may cut service, which then reduces ridership, which causes even more cuts; we call that a death spiral. We need to prevent that from happening,” Weiner said.
Addressing the state’s homelessness crisis
The governor said some of the state’s biggest priorities will not see cuts. As far as the state’s response to homelessness, the governor is proposing to provide an additional $1 billion to city and county governments to confront the issue. This comes months after the governor threatened to withhold funds from local governments across the state because their homelessness reduction plans weren’t aggressive enough.
Newsom told reporters Tuesday that he will request the Legislature to put measures into state law that would hold cities and counties accountable for reducing homelessness and increasing housing.
“Our vision is realized locally,” Newsom said.
assembly Luz Rivas, D-San Fernando Valley, tweeted Tuesday: “I’ve been working with advocates over the interim to develop strict accountability and ongoing funding. We need both to make true progress, and I will be introducing legislation that does just that. ”
Confronting opioid and fentanyl issues
The governor proposed investing $97 million in new investments to combat the issues with fentanyl and opioids seen across the state and country. Those investments include dollars for a Naloxone distribution project, grants for recovery and testing, and overdose medication for middle and high school students.
“Whatever our schools need, anyone who needs them will be provided,” Newsom said.
Several proposals have been filed this legislative year to address the issue, including Assm. Joe Patterson, R-Granite Bay, who wants to require schools to always have Naxolone on hand.
Money for controversial oil drilling law
The governor’s budget proposal includes $54.2 million over the next two years to implement a new law that would prohibit oil drilling near schools, parks and communities. That law is currently tied up in court, as opponents of the measure seek a referendum against it.
Kobi Nasceck with environmental advocacy group VISION said in a statement in part, “It’s a clear message to Big Oil not to mess with our democracy. The oil industry may be throwing every dirty tactic from their playbook to undo policies that protect public health, but this budget is one step closer to a permanent statewide setback.”
Changes to funding strategy at the southern border
Last month, the governor said California had spent $1 billion over the last three years funding services and resources for migrants at the southern border, which he said the state could not continue doing in anticipation of the budget shortfall.
Newsom said that was still the case as of Tuesday. He said the state has been spending money on medically focused sites for COVID-19 testing and vaccination for migrants. That will eventually be phased out because Newsom said it won’t be necessary. Newsom said the focus going forward will be to invest in the most vulnerable.
“Even in that strategy, there are concerns around a post-Title 42 world,” Newsom said.
The governor said he’s encouraged by recent conversations he’s had with the Biden administration that give him confidence the federal government will make resources available.
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