SACRAMENTO— With a $38 billion budget deficit to solve, there are more losers than winners in the plan put forward Wednesday by Gov. Gavin Newsom.
But it could be worse, much worse: By projecting higher revenues, Newsom estimates a deficit about half the size of the $68 billion figure last month from the Legislative Analyst’s Office. And by dipping into the state’s reserves to the tune of $13 billion, his proposed budget includes fewer significant spending cuts, explain CalMatters’ Mikhail Zinshteyn and Sameea Kamal.
And advocacy groups for some state-funded programs expressed relief that they have been spared deep spending cuts, so far.
Still, there are some losers:
- Climate action programs: Newsom proposed slashing funding for programs aimed at tackling or adapting to climate change to about $48.3 billion, or by 7% from last year, writes CalMatters climate reporter Alejandro Lazo. And despite ambitions for the state to reach zero emissions by 2035, the governor proposed delaying $600 million in spending on electric vehicles by three years, including the electric car rebate program aimed at getting more lower-income residents to purchase them.
Mary Creasman, California Environmental Voters chief executive, in a statement: “We can’t backslide or slow down while the climate crisis speeds up. We need our state leadership to do more, not less.”
- Health care workers: One of the biggest wins labor notched this past session was passing legislation to raise the minimum wage to $25 for health care workers, with the first pay increases rolling out in June. But as CalMatters health reporter Ana B. Ibarra explains, the governor is proposing to delay those raises until the state’s fiscal outlook is better. Though his administration did not disclose this contingency when he signed the law last year, Newsom said the bill’s backers had agreed to tie the wage increase to the state’s budget prospects. Whenever the wage boost does go into effect, it is expected to boost close to 500,000 health care workers in California.
David Huerta, Service Employees International Union California president, in a statement: “SEIU California looks forward to working with the Administration and the Legislature to ensure that these critically needed workforce investments are implemented while maximizing federal funds and holding the healthcare industry accountable for investing their resources in their workers and in patient care.”
- Homelessness: For the fourth year in a row, pleas for ongoing funding to address homelessness programs would go unanswered. That’s something that has frustrated city and county leaders, as well as service providers, for years, according to CalMatters homelessness reporter Marisa Kendall. Relying on one-time grants makes it difficult to plan ahead and invest in long-term programs, they say.
Sharon Rapport, director of California state policy for the Corporation for Supportive Housing: “Without ongoing consistent funding, it means we’re going to have a dysfunctional homeless response system because our homeless response system never knows how much funding is coming from the state.”
- Migrant aid: Last year, Newsom and lawmakers planned to spend $150 million on humanitarian services for migrants who were released from short-term federal custody at the border. But none of that money remains in the governor’s budget proposal, leaving nonprofits in San Diego and Imperial counties continuing to struggle as they offer assistance to the influx of tens of thousands of people who have crossed the border.
Masih Fouladi, California Immigrant Policy Center executive director: “We strongly encourage and advocate for state leaders to prioritize what’s happening (at the border) and the impact it’s having on the (non-governmental organizations) on the ground that are doing the work.”
On the heels of Governor Newsom’s 2024-25 budget proposal, the California Budget & Policy Center (Budget Center), a nonpartisan research and analysis nonprofit, weighed in with the following statement from its executive director, Chris Hoene.
“In good times and in bad, all Californians deserve the dignity and support necessary to lead thriving lives. State leaders possess both the tools and responsibility to assist Californians, safeguard critical services, and address the 2024-25 budget year deficit. With a variety of budget tools — including raising additional revenues — state leaders can fulfill their duty to ensure the well-being of Californians and navigate the challenges ahead.
“Despite the budget shortfall, California is home to great wealth. Governor Newsom’s resistance to raising revenue and making the state’s tax system more fair poses a risk of additional cuts to essential services like healthcare, education, poverty reduction programs, climate resilience, and public transportation, making it even harder for Californians who are already struggling to get by.
“State leaders should exhaust alternatives to austerity measures, which would disproportionately negatively impact low-income communities and Californians of color. The governor’s proposal for ongoing reductions to CalWORKs supportive services, delays to programs that help address the homelessness crisis, the lack of new investment in affordable housing, and continued delay of additional child care slots for a second year, are particularly concerning because they would harm Californians who are facing the greatest need.
“In addition to responsibly drawing down budget reserves and reducing unallocated one-time and temporary spending, policymakers can increase state revenues by eliminating costly tax breaks to ensure profitable corporations and the wealthy pay their fair share in taxes. Even temporary suspensions of certain tax breaks could play a crucial role in ensuring a fair distribution of our state’s wealth and help leaders address the shortfall.
“The silver lining here is that California is far better equipped to tackle this challenge than it was heading into the Great Recession, courtesy of a decade of prudent budgeting and savings in the state’s rainy day funds. This resiliency is evident by the governor’s steadfast commitment to expanding full-scope Medi-Cal to all Californians regardless of immigration status, maintaining a strong CalEITC and Young Child Tax Credit, preserving investments and reforms to education systems, and safeguarding mental health investments, all of which are essential for building a more equitable state. However, there is still much more room for improvement to enhance Californians’ well-being and secure our state’s fiscal future.”
A final reminder: What Newsom outlined Wednesday is only the first take on the budget. The Legislature will hold hearings and weigh in before the governor unveils his revised plan in May, after updated tax revenue numbers. The Legislature has until June 15 to pass a balanced budget, and legislators and Newsom have until July 1 to agree on a final 2024-25 spending plan.
