Budget proposes $15B for economic relief
Gov. Newsom’s budget would turn a state tax revenue windfall into ramping up of direct aid amid pandemic.
SACRAMENTO >> California Gov. Gavin Newsom’s $227 billion budget plan released Friday would turn a $15 billion windfall because of surging tax revenues into economic relief as the state confronts the coronavirus pandemic and ensuing deaths.
His budget proposal comes as the state faces “a challenge the likes of which we never expected,” Newsom said. “Our numbers changed, but our values did not.”
Newsom said his plan addresses f ive urgent needs: Vaccinating people against coronavirus, reopening schools, supporting small businesses, getting money into people’s pockets and preparing for wildfires, for which he includes $1 billion.
On vaccines, he said his focus is “getting out of the freezers and administering into people’s arms, these vaccines.”
“We must do that in order to safely reopen for in-person instruction in our schools, to reopen our small businesses as well as businesses large and small all across the state of California,” he said.
It marks a sharp turn as lawmakers were forced to make cuts last summer as they struggled to make up a $54.3 billion shortfall in the midst of the pandemic.
Since California’s progressive tax structure relies mostly on wealthy earners, the pandemic has led to a strange contrast in the nation’s most populous state: Many people who earn more than $60,000 per year have been able to keep their jobs because they can work from home.
That has led the state to collected $74.4 billion in taxes, or $13.7 billion more than it had anticipated.
But the employment rate for people who earn less than $27,000 per year — including restaurant and retail workers — has dropped nearly 27% since January, according to data from Opportunity Insights at Harvard University.
Newsom already forecast some of his plans. After Congress approved a $600 payment for adults, Newsom said he wants to give an additional $600 to Californians who earn $30,000 or less. If approved, that proposal would cost $2.4 billion.
Newsom also wants to spend more than $4 billion to, he says, create jobs and help small businesses.
The governor predicted the state will get billions more in additional federal funding once Presidentelect Joe Biden takes office, including $6.7 billion in education funding.
He has already said he wants to give schools $2 billion to help pay for testing, ventilation and personal protective equipment as he seeks a return to inperson instruction, for which he has received lukewarm support from teachers unions and school districts. He said passage of that plan requires immediate action, saying schools can’t wait for the money.
Public education, which makes up about 40% of California’s budget, takes on added urgency after the state last year deferred more than $12 billion in spending for public schools. The deferral meant school districts had permission to spend the money, but the state would pay them back in future years. Many had to borrow or dip into their reserves to cover it.
Homelessness, which has previously been a focus for his administration, would get $1.7 billion in fresh investments for housing the homeless, building on a plan last year called Project Roomkey and Project Homekey.