Gov. Gavin Newsom announced his May revision to the California state budget on Friday, in which he laid out how the government aims to tackle a projected deficit of $31.5 billion.
The projected deficit is an increase of $9 billion since January, but Newsom emphasized his proposal would protect key investments made in climate, the economy, education, health care and housing.
Newsom said because of the state’s “prudence” and “restraint,” California will be able to protect certain programs regardless of the deficit — a notion he said was “foundational.”
“As a consequence of that restraint, as a consequence of our prudence, we are in a position … where we’re preserving and enhancing and protecting programs that we all hold dear,” said Newsom. “It doesn’t mean we’re not making adjustments (and) it doesn’t mean there are not issues that we will have to navigate together with the Legislature.”
California Republicans said the deficit is the fault of Democrats and Newsom — whose policies they called “reckless,” and said were to blame for residents leaving the state and taking their tax dollars with them.
“Today’s massive $32 billion budget deficit should be a wake-up call to all Democrats that after years of increased spending, they should have better results to point to than an outrageous cost of living, surging crime, rampant homelessness, a fentanyl crisis, failing schools and inadequate water storage,” Jessica Millan Patterson, California Republican Party spokeswoman, in a press release. “Now is the time for smarter policies and responsible spending that California Republicans have long advocated for.”
To address the deficit, Newsom has proposed several measures, including shifting an additional $3.3 billion in existing commitments out of the general fund. This includes paying for $1.1 billion in climate spending, $1.1 billion in college student housing projects with bonds and withdrawing another $1 billion in unused money from programs such as middle-class tax refunds and utility bill support for low-income residents.
The deficit did, however, force Newsom to delay a program that would turn foreclosed properties into affordable housing, which would have a price tag of $500 million. Instead of having all that money spent at once, it would be spread out over four years.
California GOP officials also said two red states, Texas and Florida, provide a better example of how a budget should work, claiming. Both reported a “record budget surplus.”
State Sen. Scott Wilk, R-Santa Clarita, echoed the GOP’s sentiments but added he was happy to see Newsom able to retain some programs.
“The Democratic majority’s addiction to overspending ends up putting the state’s most vulnerable at risk when times are lean,” said Wilk. “While I am glad to see the governor reinstate funding for much-needed projects, like flood infrastructure, there is still much uncertainty ahead. Rest assured I will keep working with my colleagues, on both sides of the aisle, in finding sustainable solutions to the challenges facing the state.”
Assemblywoman Pilar Schiavo, D-Chatsworth, said she was happy to see Newsom keep his commitment to more than $15 billion in funding for solutions to homelessness, including increased funding for health care and mental health services.
“Ultimately, it is both houses of the Legislature who will draft a final state budget which is sent to the governor, so I look forward to working with my colleagues and the governor to finalize a balanced budget that funds our schools, keeps our communities safe, and protects our most vulnerable,” wrote Schiavo in a press release. “Given the projected shortfall, we have our work cut out for us, but I am confident we can get this done by the June 15 constitutional deadline.”
Newsom’s proposed budget will no doubt be subject to scrutiny and negotiation with the state Legislature, as lawmakers work to find solutions to the state’s growing budget deficit. In what appeared to be a verbal olive branch to the other side, the governor acknowledged there were some caveats to the state’s tax structure — in which roughly one-half of the state’s revenue comes from the personal income tax of the wealthiest 1% of residents.
“Foundationally, the work we have done over the course of the last number of years to pay down debt, to use one-time surpluses disproportionately for one-time programs, the work we have done to reconcile the fact that we are a progressive state in every way, shape, or form, including a progressive tax system,” Newsom said. “We recognize the nature of volatility … not only in the context of prudence in terms of fiscal planning but in terms of the uncertainty that we’re facing going forward.”
