New­som’s first bud­get boosts spend­ing on schools, health

$209-bil­lion pro­posal is ‘a re­flec­tion of our val­ues,’ gov­er­nor says. It re­lies on pro­jec­tions of record tax wind­fall.

Los Angeles Times - - FRONT PAGE - By John Myers

SACRAMENTO — Gov. Gavin New­som un­veiled a $209-bil­lion bud­get pro­posal Thursday that re­lies on a record-set­ting wind­fall of tax rev­enues to boost pub­lic schools and health­care pro­grams while ad­ding sig­nif­i­cant one-time spend­ing to ad­dress the state’s home­less­ness epi­demic and pre­pare for fu­ture nat­u­ral dis­as­ters.

New­som pre­sented his plan in a free­wheel­ing event more akin to a po­lit­i­cal rally or TED talk than a for­mal bud­get in­tro­duc­tion, us­ing a slide pre­sen­ta­tion at the nearly two-hour event to make cri­tiques and ob­ser­va­tions. The gov­er­nor in­vited not only jour­nal­ists but statewide elected of­fi­cials, as well as lead­ers of pow­er­ful la­bor unions that sup­ported his can­di­dacy. Guests ap­plauded as he vowed to ex­pand ser­vices to help Cal­i­for­nia’s need­i­est.

“I know it’s rote and cliche to say it’s a re­flec­tion of our val­ues, but it is a re­flec­tion of our val­ues,” New­som said of his bud­get. “It is demon­stra­ble that these dol­lars at­tach to real peo­ple and real peo­ple’s lives.”

Key to the gov­er­nor’s fis­cal blue­print is its pro­jec­tion of $21.6 bil­lion in un­ex­pected rev­enue — money with no strings at­tached on its use. The es­ti­mate is sig­nif­i­cantly higher than even the most op­ti­mistic pro­jec­tions made just two months ago, and it’s on top of $15.3 bil­lion ex­pected for the of­fi­cial “rainy day” re­serve fund set aside for the direst of eco­nomic cir­cum­stances.

New­som in­sisted that his plan, which uses $18.5 bil­lion of the un­re­stricted wind­fall for one-time ex­penses, is even more pru­dent in some re­spects than those crafted by his pre­de­ces­sor, for­mer Gov. Jerry Brown.

“We are ar­gu­ing for even more dis­ci­pline on our one­time in­vest­ments,” New­som said. “The mes­sage we are ad­vanc­ing here is dis­ci­pline. Build­ing a strong founda-

tion on which ev­ery­thing else can be built.”

The bud­get of­fers ad­di­tional money for nu­mer­ous pro­grams, many of which are used pri­mar­ily by low-in­come res­i­dents, par­tic­u­larly those with chil­dren. New­som pro­posed a $1-bil­lion “work­ing fam­i­lies tax credit,” more than dou­ble the size of the state’s ex­ist­ing tax break for low-in­come work­ers. The bud­get would no­tably ex­pand el­i­gi­bil­ity for the tax break to those who earn up to $15 an hour, es­ti­mated by the ad­min­is­tra­tion to add up to 400,000 ad­di­tional fam­i­lies.

The gov­er­nor will also ask law­mak­ers to in­crease monthly wel­fare as­sis­tance grants un­der the state’s Cal­Works pro­gram, build­ing on an effort led by law­mak­ers over the last two years.

Ef­forts to help ease Cal­i­for­nia’s hous­ing and home­less­ness crises would be bol­stered un­der the spend­ing plan too, with $500 mil­lion to be set aside to help lo­cal govern­ments build shel­ters and add ser­vices to help the home­less.

Some of the money would be ear­marked for the state’s 11 largest cities, while other funds would be used to re­ward com­mu­ni­ties that are the most suc­cess­ful at cre­at­ing hous­ing op­tions. New­som also called for an ex­pe­dited en­vi­ron­men­tal re­view of con­struc­tion projects to al­le­vi­ate home­less­ness.

He said if the state can use those same tools to “ex­pe­dite [sports] sta­dium projects, and we do all the time, we sure as hell should be able to do that for 138,000 damn souls that are out on streets and side­walks.”

New­som pledged to es­ca­late the state govern­ment’s re­sponse to the lack of af­ford­able hous­ing, ask­ing law­mak­ers to al­lo­cate $1.3 bil­lion to­ward a new effort to build more homes and apart­ment units — and say­ing that fewer state trans­porta­tion dol­lars could go to com­mu­ni­ties that fail to take ac­tion on hous­ing.

“I’m in the spirit of col­lab­o­ra­tion and co­op­er­a­tion,” the gov­er­nor said. “But I’m also in the spirit of see­ing things hap­pen.”

State Se­nate Mi­nor­ity Leader Pa­tri­cia Bates (RLa­guna Niguel) said any re­fusal to fund trans­porta­tion projects would fly in the face of prom­ises made to voters last fall who left in place higher fuel taxes and ve­hi­cle fees.

“With­hold­ing funds for road re­pairs would be a mis­take and a bait-and-switch on the com­mit­ments made,” Bates said.

A num­ber of pro­pos­als re­flect rel­a­tively small tar­geted in­fu­sions of cash. The New­som ad­min­is­tra­tion be­lieves those ini­tia­tives will pro­vide a foun­da­tion for new or ex­panded ser­vices, many of which would need to be funded over the course of sev­eral years.

Some of the phased-in ef­forts were out­lined in the days lead­ing up to New­som’s in­au­gu­ra­tion Mon­day. The gov­er­nor will ask law­mak­ers to spend $1.8 bil­lion, mostly in one-time ex­penses, to im­prove early child­hood ed­u­ca­tion and en­cour­age more schools to pro­vide full-day kinder­garten. He will also ask for early steps to­ward a sig­nif­i­cant ex­pan­sion of Cal­i­for­nia’s paid fam­ily leave for new par­ents. And New­som has em­braced calls for a sec­ond year of tu­ition-free com­mu­nity col­lege for any stu­dent who wants it, a $40-mil­lion pro­posal that builds on ex­ist­ing law that cov­ers costs for the first year.

“We are ex­cited,” said Eric Heins, pres­i­dent of the Cal­i­for­nia Teach­ers Assn. “He said what his com­mit­ments were on the cam­paign, and now he’s fol­low­ing through on those.”

The bud­get also makes good on a prom­ise New­som made hours af­ter tak­ing the oath of of­fice: full ac­cess to Medi-Cal, the state’s low-in­come health­care pro­gram, for any­one up to age 26 who is in the U.S. il­le­gally. Those who are 19 or younger are al­ready cov­ered.

The bud­get pro­posal, which would be the first of its kind in the na­tion, puts the es­ti­mated cost for the first year at $260 mil­lion — dol­lars that must come from the state, given fed­eral re­stric­tions based on im­mi­gra­tion sta­tus.

New­som said the ex­pan­sion would be a first step to­ward pro­vid­ing uni­ver­sal health­care, a key part of his plat­form dur­ing the 2018 cam­paign. Es­ti­mates are that in­creas­ing the age cut­off to 26 would ex­tend cover­age to 138,000 young im­mi­grants now in the state il­le­gally.

Even with­out fed­eral fund­ing, the effort has drawn the ire of con­ser­va­tive law­mak­ers. On Tuesday, U.S. Sen. Bill Cas­sidy (RLa.) vowed to lead an effort in Wash­ing­ton to block New­som from ex­pand­ing health­care ac­cess to more im­mi­grants with­out le­gal sta­tus. Cas­sidy tweeted that Cal­i­for­nia shouldn’t use “Amer­i­can cit­i­zens’ money” for the effort. New­som fired back on Twit­ter that health­care should be a “ba­sic right.”

The gov­er­nor also pro­posed new help for some com­mu­ni­ties dev­as­tated by re­cent wild­fires, in­clud­ing an of­fer to pay back prop­erty tax rev­enues that were lost when homes were de­stroyed. The list of new spend­ing in the New­som bud­get is long: a boost to in-home sup­port ser­vices, com­plet­ing Cal­i­for­nia’s early earth­quake warn­ing sys­tem, ex­tra pay­ments to­ward pub­lic em­ployee pen­sions and an al­most four-fold in­crease in the size of Cal Grants for col­lege tu­ition and books.

He even of­fered as­sis­tance to fed­eral govern­ment work­ers who are with­out pay due to the shut­down stale­mate in Wash­ing­ton.

“We’ll get you un­em­ploy­ment in­sur­ance,” New­som said. “We’ll cover you. We have your back.”

Those pro­posed ef­forts and oth­ers are made pos­si­ble by a con­tin­ued strong econ­omy, the sev­enth con­sec­u­tive year in which tax rev­enue col­lec­tions are ex­pected to out­pace of­fi­cial es­ti­mates. It is a re­mark­able run in a state where deficit­plagued bud­gets were once com­mon­place, help­ing plunge credit ratings and voter ap­proval of law­mak­ers to his­toric lows.

But the gov­er­nor and leg­isla­tive lead­ers also know that a re­ces­sion could be loom­ing. An­a­lysts have pointed out that if the na­tional econ­omy con­tin­ues to pro­duce solid re­sults through this sum­mer, it will tie the record — 10 years — for the long­est re­cov­ery in mod­ern his­tory, dou­ble the length of av­er­age eco­nomic ex­pan­sions.

Last month, of­fi­cials re­ported the state’s un­em­ploy­ment rate re­mained low at 4.1%, with more than 3 mil­lion Cal­i­for­nia jobs cre­ated since the be­gin­ning of the cur­rent eco­nomic up­swing.

New­som will get his best chance to set the state’s fis­cal agenda in May, when his re­vised bud­get will take into ac­count tax pay­ments made by mil­lions of Cal­i­for­ni­ans by April 15.

[email protected]­times.com Twit­ter: @john­my­ers Times staff writ­ers Taryn Luna, Phil Wil­lon, Pa­trick McGreevy and Melody Gu­tier­rez con­trib­uted to this re­port.

‘We are ex­cited. He said what his com­mit­ments were on the cam­paign, and now he’s fol­low­ing through on those.’

— Eric Heins, pres­i­dent of the Cal­i­for­nia Teach­ers Assn., reacting to Gov. Gavin New­som’s bud­get plan

Rich Pe­dron­celli As­so­ci­ated Press

GOV. GAVIN NEW­SOM presents his first state bud­get pro­posal dur­ing a free­wheel­ing news con­fer­ence. The $209-bil­lion plan of­fers more money for myr­iad pro­grams, many of which ben­e­fit mostly low-in­come res­i­dents.

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