Built on projections for a ninth consecutive year of excess tax revenue – a sequence that made California’s deficit past a distant memory – The $ 286.4 billion spending plan that Governor Gavin Newsom unveiled on Monday builds on recent state efforts to tackle the COVID-19 pandemic, homelessness and worsening drought while breaking K-12 school funding records set last year.
In total, the governor’s plan calls for nearly $ 10 billion in new spending for what a fact sheet from his office calls “five of California’s biggest challenges: COVID-19, climate change, homelessness, inequalities and the safety of our streets ”.
In general terms, Newsom’s proposal to the Legislature is in line with budgets drafted in recent years. While it directs excess tax revenue to the state’s cash reserves and pays off some long-term debt, there is still a long way to go for the agendas championed by the Democratic governor and lawmakers from both major parties, such as ” enhanced security in clinics offering abortions and cancellations. an increase in the California gasoline tax that was slated for July.
“We have the ability to invest in our growth engines, to invest in the future, as well as to prepare for the uncertainties that the future presents,” Newsom said at a press conference on Monday.
The bulk of the plan covers expenses in the fiscal year that begins July 1. But the governor is also asking lawmakers for immediate action to expand the state’s response to the COVID-19 pandemic, asking for permission to quickly spend about half of a $ 2.7 billion budget proposal to boost testing, vaccinations, and health workers statewide. Newsom also wants to reinstate rules requiring California employers to provide COVID-19 sick leave to workers to recover or care for a family member, a statewide policy that expired in the fall last.
A continued effort on the pandemic is one of many carry-overs from last year in Newsom’s budget, his fourth since taking office in 2019. The spending plan also contemplates significant new funding in response to the crisis. homeless people in the state, calling for an additional $ 2 billion over two years to move people out of settlements and place them in immediate shelter and to provide mental health services. The governor said last year’s efforts had pulled 58,000 people off the streets, an important but preliminary step towards solving the problem.
“I’m not naive,” he said. “I see exactly what you see, and that is the need to do more and better. Because we still have tens of thousands more struggling and suffering.
The $ 2 billion proposal, administration officials say, is an interim step pending completion of long-term housing options, funded by the historic $ 12 billion investment from the state budget. last year in helping the homeless.
More ideas are likely to surface in the coming months. Republican lawmakers on Friday asked the governor to convene a special homelessness legislative session. Among the priorities listed in their letter to the governor, GOP lawmakers say the state needs to increase accountability for how and where funds have already been spent.
Newsom, whose budget presentation lasted nearly three hours, said he expects community leaders to do their part, noting that local governments must submit a “plan of action on homelessness “later this year.
“We are not going to finance failure,” he said. “We’re not going to fund people who don’t provide these plans.”
The governor also hinted at something that was not in the budget, but said he would recommend in the coming weeks: a major overhaul of state trusteeship laws, a change that could force some homeless people to receive treatment.
Newsom, who declined to provide further details, said the subject of taking someone off the streets “requires us to be a little uncomfortable” but the state needs “a few more tools to help those who clearly cannot help themselves “.
An additional $ 2 billion in the governor’s budget would be used to meet California’s broader housing needs, providing housing subsidies and tax credits to trigger the development of more places to live in centers -state cities. The plan he presented to lawmakers on Monday said the effort would promote “a comprehensive and integrated framework for climate and housing planning.”
Efforts to mitigate the impacts of climate change would also be stepped up as part of the governor’s plan: $ 1.2 billion in new funds to reduce the risk of forest fires through better forest management, $ 648 million in new funds $ for firefighting and $ 750 million for drought relief for residents, agriculture and wildlife habitat.
State subsidies to encourage the purchase and use of zero-emission vehicles would rise sharply under Newsom’s budget – a six-year, $ 10 billion effort when combined with measures taken. last year. Rebates for electric vehicle buyers would increase, more money would be set aside for the construction of charging stations, and the state would allocate nearly $ 3.5 billion to zero-emission school buses, transit buses, and more. common and heavy trucks that ship containers to and from ports.
Various proposals in the new spending plan aim to help low-income families, with a focus on children. Newsom’s proposal would index the state’s $ 1,000 “young child tax credit” for inflation, allowing the annual grant to grow over time, starting in tax year 2022. The budget also seeks to overturn long-standing law that cuts child support payments to a lower level. parent who is a former recipient of government assistance, such as the state’s social work assistance program, CalWORKs. This would reduce the government’s clawback revenue by $ 187 million.
Still, advocates urged Newsom and lawmakers to do more.
“One in 8 children in California depends on a local child support agency to provide the dollars they need for their food, clothing, shelter and health care,” said Greg Wilson, executive director of Child Support Directors Assn. from California. “As state revenues have soared to unprecedented heights, California children and families face a relentless epidemic of child poverty.”
Lower-income people in the state receive health care services through Medi-Cal, which is estimated to provide coverage to 14.2 million Californians by the end of the year , or about 36% of all residents of the state.
Few changes to the program are likely to receive as much attention as Newsom’s embrace of what many Legislative Democrats have wanted for several years: Medi-Cal eligibility for any resident, regardless of immigration status. , who qualifies based on his income. Current law provides Medi-Cal coverage to immigrants up to the age of 26 and, as of May 1, those aged 50 and over. The final group of immigrants, those in their 30s and 40s, will be eligible for Newsom’s plan in 2024.
Child care services would expand under the plan, including additional subsidized child care slots and increased tariffs for child care providers – in part, due to last summer’s agreement to recognize a new union representing caregivers.
As with most state budgets, constitutional requirements passed by voters give K-12 schools and community colleges the largest portion of general fund dollars. Newsom’s plan provides $ 119 billion in funding for education, almost the equivalent of all state budget spending in 2011-12. All sources of funding combined, spending per student in California is estimated to reach $ 20,855, with more dollars coming from the general state fund than ever before.
The budget sent to lawmakers on Monday provides more than $ 600 million in new funding for the University of California and California State University campuses, combined, on top of the funds’ current general support. Both systems are expected to increase the number of students in the state, and the budget adds more money for scholarships for students from middle-class families.
Not all of the governor’s budget plan proposals are a continuation of earlier efforts. Following a recent spike in retail theft in California, Newsom launched a new plan to strengthen law enforcement efforts. This includes funding for what his administration calls a “smash-and-grab enforcement unit,” grants for small businesses that have been affected, and state-level lawsuits if local prosecutors choose not to. to act.
A significant number of credits and other tax breaks are included in the proposal. None is more important than a proposal to reinstate the state’s “net operating loss” tax deduction for businesses, suspended in 2020 over fears of a pandemic-induced budget deficit. The resumption of the deduction, along with a series of other tax credits for businesses, will cost the state $ 5.5 billion in 2022-23.
While the governor’s budget is chock-full of ambitious new proposals, the enormity of the projected fiscal surplus may again overshadow any singular effort. State budget officials estimate the total surplus – what they define as all unexpected money, even funds to be spent on schools or placed in cash reserves – at $ 45.7 billion by next summer. But lawmakers would have the discretion to spend just under half that amount.
They also need to decide how to react to Newsom’s projections that final tax revenue calculations for the current fiscal year and the one that ended last June, combined, will exceed California’s constitutional spending limit. The governor’s budget officer said on Monday that at least $ 2.6 billion in taxes collected could be subject to the 42-year spending limit rules of either diverting money to exempt spending from the limit, or to distribute the excess money between schools and taxpayer reimbursements.
Times editors Hannah Wiley and Mackenzie Mays contributed to this report.
This story originally appeared in Los Angeles Times.