SACRAMENTO — California Gov. Gavin Newsom on Tuesday proposed a $297 billion budget, prioritizing money to address homelessness and education while cutting some climate spending amid a projected $22.5 billion budget deficit.
The proposed budget, which would take effect July 1, is about $9 billion less than the current fiscal year, when Newsom had a massive surplus.
One of the reasons why California isn’t bringing in as much revenue as expected is because wealthy taxpayers are making less money because of a weakened economy and stumbling stock market.
Newsom’s proposed budget will change as tax revenues come in later this year and won’t take effect until July 1.
How Does Newsom Want to Cover the Shortfall?
Through a combination of delayed spending, shifting expenses, and cuts.
Newsom wants to delay $7.4 billion of spending, pushing it to future years. He wants to shift $4.3 billion of expenses to other accounts outside of the state’s general fund and limit borrowing to account for another $1.2 billion.
Newsom is proposing $9.6 billion in cuts. Of those, $5.7 billion would be permanent reductions. The rest of the cuts — $3.9 billion — could come back if the state has more money in the budget than currently anticipated.
The cuts are spread throughout the budget, including scaling back some of Newsom’s ambitious climate proposals. But most of the state’s major programs and services, including public education and major health care assistance programs, were not affected.
Housing and Homelessness
Even with revenue shrinking, Newsom is allocating more money to addressing homelessness. His proposal includes $3.4 billion for homelessness, with $400 million to clean up tent encampments and $1 billion for cities and counties to reduce the number of people living outdoors.
He has stated repeatedly to local officials that they won’t get money until they submit bolder plans to reduce homelessness and residents start seeing a difference on the streets.
Newsom is not backing down from building more housing given that the state’s homelessness crisis is tied to a severe lack of new construction. His administration has pushed policy changes to streamline new home construction and has become more aggressive in ordering cities and counties to build more homes.
But the proposed budget includes a $350 million reduction in loans, technical support, and other assistance for new homebuyers.
Climate Change and Environment
California has already set its sights on achieving carbon neutrality by 2045, meaning the state will remove as many carbon emissions from the atmosphere as it emits.
But Newsom has proposed reducing what the state plans to spend on climate over a five-year period by $6 billion. That would include $4.6 billion in cuts for the upcoming fiscal year, said Sergio Aguilar, assistant program budget manager at the California Department of Finance.
The changes would include reductions in investments for the state’s plans to make zero-emission vehicles more affordable for low-income neighborhoods and move delivery trucks, airplanes, and rail lines away from greenhouse gases. It comes as the state is pushing a massive shift away from gas-powered vehicles into cars that run on batteries.
California is required to spend a certain minimum on education determined by a 1980s era constitutional amendment known as Proposition 98. That means proposed overall spending for the upcoming fiscal year is similar to last year’s.
The proposal includes spending $604 million to expand access to transitional kindergarten in addition to funding an incremental transition for state preschool providers to serve at least 10% of students with disabilities by July 1, 2024.
Newsom rejected a bill last fall that would have made kindergarten mandatory before students enter the first grade at a public school, citing the costs associated with the proposal.
It would delay the allocation of $550 million for a program supporting school facilities for providing transitional kindergarten, full-day kindergarten or preschool classrooms until 2024.
Health and Human Services
Newsom’s proposal maintains plans to provide health care to low-income adults ages 26 to 49 regardless of immigration status on Jan. 1, 2024, and to expand behavioral health care services for children and teens.
The budget also maintains over $1 billion a year to provide higher cash payments through the CalWORKS program to individuals with disabilities, older adults and low-income children and families.
Newsom has proposed additional funding for counties and courts to implement a controversial mental health court program he pushed to get homeless people with schizophrenic or bipolar disorders into treatment, even if it’s against their will.
The proposed budget includes $93 million from an opioid settlement fund over four years, much of it to increase the distribution of naloxone to first responders to reverse fentanyl and opioid overdoses.
After greatly expanding the number of subsidized childcare slots last year, Newsom said Tuesday he wants to delay 20,000 of those lots by one year to help balance the budget. The Newsom administration says many of the new slots from last year have not yet been filled.