California Budget

California Gov. Gavin Newsom delivers his budget proposal in Sacramento, Calif., Tuesday, Jan. 10, 2023. California faces a projected budget deficit of $22.5 billion for the coming fiscal year, Newsom announced Tuesday, just days into his second term. It’s a sharp turnaround from last year’s $98 billion surplus. (AP Photo/José Luis Villegas)

(The Center Square) - Facing a $22.5 billion deficit, California Governor Garvin Newsom expressed optimism in unveiling the 2023 budget for the state. The $297 billion package is $11 billion less than 2022 with cuts focused on electric vehicles, rail and transit, enraging environmentalists.

Newsom said he had no trepidation about California’s future and that the state will be better positioned than most other states to weather a recession. The budget situation is a massive reversal from only months ago when the state was considering a $100 billion budget surplus.

Senate Budget Vice Chair, Sen. Roger Niello (R- Fair Oaks), said, “California’s assumption of unending higher revenue, combined with overspending on misguided priorities, led the state down the path to the deficit we have today. And this is in contrast to other states that are considering rebates.” The deficit is fueled by a decline in capital gains taxes once sourced from Silicon Valley and the state’s wealthiest residents.

“California can’t afford a short-sighted budget,” Mary Creasman, CEO of California Environmental Voters, said in a statement to CalMatters. “To further delay these investments will further compound the climate crisis and the cost of inaction will be far worse.”

Newsom’s proposed budget aims to keep eight promises as priorities for the state, transforming education, addressing homelessness, creating affordable housing, increasing healthcare access, facing climate challenges, keeping California safe, and nurturing economic development.

Education funding saw a small increase in per capita spending for kindergarten through middle school with a $108.8 billion budgeted. Newsom proposed a cost of living allowance (COLA) for educators of 8.13% up from last year’s 6.5%. The educational package line items included funding for learning recovery, youth behavioral issues, community schools, before/after school programs and special education.

The education budget also sought to encourage more California residents to enroll in the University of California and California State University systems and addressed fundamental costs to make college more affordable through middle-class scholarships, zero-cost textbooks, grants and a host of other cost saving opportunities.

The governor became really animated in speaking about homelessness. “People are just fed up. They’re done. People have just had it. They want to see these homeless encampments cleaned up,” Newsom said. “People want to see results, they demand results, they want more accountability for money invested.”

While the budget for homelessness didn’t see any funding cuts at $15.3 billion, the governor emphasized more accountability would be expected for those receiving money to address the homeless. “More transparency is what is required not requested.”

Under healthcare, California Advancing and Innovating Medi-Cal (CalAIM), a plan to merge Medi-Cal with other social services, got the lion’s share with a $10.7 billion commitment.

Climate challenges including wildfires, flood and drought also did not see a cut in spending from last year at $2.7 billion, with new investments in Delta levees and urban flood risk management of $200 million.

The Public safety budget included funding to tackle the fentanyl crisis with $3.5 million for Narcan medication to combat the effects of overdose set aside for middle and high schools. An additional $97 million in investments were made to increase the number of National Guardsmen by one hundred and thirteen and almost $97 million for fentanyl enforcement and harm reduction strategies.

The $35.6 billion in California’s reserves will remain untouched. “Republicans fought to fill the Rainy Day Fund, and we applaud today’s commitment to not tap into it. Recent on-going spending by the governor must be re-evaluated. The governor continues to celebrate how much he spends, but California has yet to see the results,” said Sen. Roger Niello, R-Fair Oaks.

Senate Minority Leader, Brian Jones, R-San Diego, expressed similar sentiments, “The California Senate Republican Caucus is pleased that Governor Newsom listened to our calls and is not planning on tapping into reserves. We are disappointed, but not surprised, by the governor breaking his promise to pay down our unemployment insurance debt — instead he leaves small businesses to bear the brunt of the state’s failures with a tax increase.”