California’s $100 billion surplus: What to know about Newsom’s spending plan | News

“Simply unprecedented.”

Governor Gavin Newsom is a man of many superlativesbut even he seemed to struggle on Friday to adequately describe the amount of additional money the state of California will have to spend in the coming year’s budget: $97.5 billion.

At a press conference in Sacramento, Newsom unveiled his latest record spending proposal for the coming year. Driving an overheated economy and disproportionately attracting the state’s top earners, the state should now have a bigger surplus than California — or any state — has ever had, and far more than the $76 billion the governor predicted in January.

By law, about half of the surplus must be spent on education.

That leaves “only about” $49 billion in discretionary money, and the governor wants to set aside 99% of that for one-time spending: $18.1 billion. provide financial assistance for Californians battered by inflation, plus $37 billion for infrastructure investments, including $5.6 billion for modernizing education facilities, and another $2.3 billion for the ongoing struggle against COVID-19.

A some of the other big numbers which Newsom mentioned on Friday:

• $128.3 billion in education spending, from kindergarten to high school, a record amount that equates to $22,850 per student.

• An additional $23 billion will be deposited into the state’s rainy day fund, to be drawn down the next time the economy slows

• $2.5 billion for housing, including $500 million to fund the conversion of vacant malls and storefronts into housing

• An additional $3.4 billion to pay off government employee pension debt

The massive windfall upon which the state sits, coupled with the state’s progressive tax system, is a sign of “the concentration of wealth and success in the hands of the few who historically profit from abundance. and unprecedented,” Newsom said. “I’m proud of California’s progressive tax system…and we benefit from it.”

Now the ball is in the state legislature’s court as lawmakers decide where they agree with the governor and what priorities they want to negotiate before the June 15 deadline to pass a final balanced budget for the state. fiscal year which begins July 1.

Rolling out Friday’s “May Review” is part of the annual call and answer between the governor’s office and the Legislature on how to spend your tax dollars. Each year, the Governor launches negotiations in January with a preliminary budget proposal. This year, Newsom’s offer included a record increase in K-12 education spending, as well as multibillion-dollar proposals to accelerate state wildfire prevention projects, convert more vacant hotels in housing for the homeless and open Medi-Cal, the state. health insurance program for the poor, to all undocumented immigrants.

What Newsom unveiled on Friday is a rehash of that earlier budget plan, but refreshed with new estimates of the state’s fiscal future. Add the extra excess money and you end up with a new record total: $300.7 billion.

When talking about money across the California state budget, it’s easy to lose sight of it. But to be clear, even by Golden State standards, that’s an incredible amount of money.

What a difference two years make. In May 2020, while the state was still weathering the first wave of COVID-19, the Governor’s Department of Finance was planning a A $54 billion deficit and a year of Great Depression-level unemployment. Neither happened, quite the contrary: boosted by pink economic conditions for the highest state incomes and a massive influx of cash from the federal government, the state coffers are overflowing for the past two years.

For the governor and Democratic leaders in the House and Senate, having to distribute billions of new dollars in an election year is a good problem to have. But when it comes to financial assistance for struggling families, the scale of the state’s response to the drought, what to do with the exorbitant price of gasoline and other pressing political conundrums, not everyone is on the same page.

Assembly Speaker Anthony Rendon kept his cards close to his chest in a statement, simply announcing his Democratic “teammates” in the Senate. “We know how to work together to present Governor Gavin Newsom with a budget he can be proud to sign before the constitutional deadline,” he said.

the Republican minority in the Legislative Assembly is so diminished that Democrats don’t need their support to pass a budget. But that doesn’t stop GOP lawmakers from stepping in, if only to provide voters with a clear contrast as polling day approaches.

“Newsom specializes in big announcements and blowout proposals, but rarely follows through on effective solutions that actually help California families,” GOP Assembly Leader James Gallagher of Chico said in a statement. “As Californians struggle to fill their tank and put food on the table, Democrats offer no real solution to cut costs.”

Here are other highlights from the Governor’s latest spending plan:

If the average Californian hears anything about Friday’s announcement, it’s probably this: The governor wants to send $400 to most car owners in the state.

It was the governor’s idea to help drivers bear the cost of historically high gas prices. Faced with the refusal of environmentalists, he also wants to inject 750 million dollars to encourage public transport agencies to make bus and train transport free for three months. And lest he be accused of throwing money at those who don’t need it, the proposal is limited to drivers whose car is worth under an unspecified cap.

Despite all this, there is a certain distance between this proposal and that of the Legislative Assembly, where the Democratic leaders want to send cashback to Californians make less than $250,000, car owners or not. And it’s even further from the GOP’s plan, which is simply to suspend the national gasoline tax.

“I have every confidence in the world we will be able to reconcile these modest differences and we will come to a number and a strategy that is in the best interests of Californians,” Newsom said.

Friday’s announcement also answered another big question left unanswered by the January proposal: Will an arcane amendment inserted into the California Constitution in 1979 require the state to redirect some of the extra money from the state to taxpayers?

The answer, at least for now, seems to be no.

The constitutional provision in question, the Gann limit, was approved by voters at the height of the state’s conservative “fiscal revolt” and capped state spending per capita at its 1978 level, after adjusting for inflation. Anything left over must be returned to taxpayers and school districts. With state coffers as full as they are, the January budget proposal projected the state would breach the cap.

But with more spending on the types of exempt expenses, including infrastructure, the current plan is now $2.6 billion below that cap.

Budgets, as the cliché goes, are statements of values. Newsom clearly values decrying the state of texas and his right-wing government.

Among the policies-cum-anti-Texas-dig Newsom rolled out on Friday was an overhaul of the state’s Business Relocation Tax Credit program to provide “additional consideration” to businesses moving from States with anti-abortion and “anti-LGBTQ+” laws.

The context, barely tacit, is that Texas recently passed a law that prohibits most abortions and introduces a policy that addresses gender confirmatory care for transgender children that child abuse.

Newsom’s budget plan also includes an additional budget $125 million to expand access to abortion and fund reproductive health research.

“I want to make a deep point here: California is a pro-life state,” Newsom said, appropriating a term used by the anti-abortion movement to tout his proposed spending on expanding preschool education, access to health insurance and the reduction of armed violence. programs.

He also chastised Arizona, Florida and Texas for having higher COVID death rates than California: “There are a lot of people who are pro-conception at birth but far from be pro-life.”


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