NEWSOM UNVEILS $286.4B BUDGET PROPOSAL
New funding sought to address COVID, climate, health care
Built on projections of a ninth consecutive year of surplus tax revenue — a streak that has made California’s deficit-ridden past a distant memory — the $286.4 billion spending plan Gov. Gavin Newsom unveiled Monday builds on the state’s recent efforts to address the COVID-19 pandemic, homelessness and a worsening drought while surpassing K-12 school funding records set just last year.
In all, the governor’s plan lays out close to $10 billion in new spending on what a fact sheet from his office calls “five of California’s biggest challenges: COVID-19, climate change, homelessness, inequality, and keeping our streets safe.”
In broad terms, Newsom’s proposal to the Legislature is consistent with budgets written in recent years. While it directs surplus tax revenue toward the state’s cash reserves and pays down some long-term debts, there is plenty left over for programs championed by the Democratic governor and legislators from both major parties — such as enhanced security at clinics that provide abortions and cancellation of an increase in California’s gas tax that was scheduled for July.
“We have the capacity to invest in our growth engines, invest in the future, as well as making sure that we prepare for the uncertainties that the future presents,” Newsom said at a news conference Monday.
Most of the plan covers spending in the fiscal year that begins July 1. But the governor is also asking legislators for immediate action to expand the state’s COVID-19 pandemic response, seeking authorization to quickly spend about half of a $2.7 billion budget proposal to boost testing, vaccinations and health care staffing across the state. Newsom also wants to bring back rules requiring Califor
nia employers to provide COVID-19 sick leave for workers to recover or care for a family member, a statewide policy that expired last fall.
The governor’s budget plan also would allow all income-eligible residents to qualify for the state’s health care program for low-income people regardless of immigration status.
The plan calls for the state to spend $2.2 billion a year to close the final gap in MediCal eligibility after years of incremental progress toward offering coverage to people living in the country illegally by first allowing children and seniors to qualify.
If the plan is approved by the Legislature and included in the final budget signed by Newsom in June, California would further chip away at barriers to accessing safety net programs for people living here illegally. The proposal would go into effect after Jan. 1, 2024.
“California is poised to be — if this proposal is supported — the first state in the country to achieve universal access to health coverage,” Newsom said during his budget news conference.
The spending plan also envisions significant new funding in response to the state’s homelessness crisis, calling for an additional $2 billion over a two-year period to get people out of encampments and into an immediate shelter and to provide mental health services. The governor said last year’s efforts helped get 58,000 people off the streets, an important but preliminary step toward addressing the problem.
“I’m not naive,” he said. “I see exactly what you see, and that’s the need to do more and better, because we still have tens of thousands of others struggling and suffering.”
The $2 billion proposal, according to administration officials, is an interim step while waiting for the completion of long-term housing options, financed by last year’s historic $12 billion state budget investment in homelessness assistance.
Newsom, whose budget presentation lasted almost three hours, said he expects community leaders to do their part, noting that local governments need to submit a “homelessness action plan” later this year.
“We are not going to fund failure,” he said. “We’re not going to fund folks that don’t provide those plans.”
The governor also hinted at something that wasn’t in the budget but he said he will recommend in the coming weeks: a far-reaching overhaul of the state’s conservatorship laws, a change that could force some unhoused Californians into treatment.
Newsom said that the topic of removing someone from the streets “requires us to be a little bit uncomfortable” but that the state needs “a few more tools to help those that clearly can’t help themselves.”
Another $2 billion in the governor’s budget would be used to tackle California’s broader housing needs, providing housing grants and tax credits to spark the development of more places to live in downtown areas across the state. The outline he presented to lawmakers Monday says the effort would promote “a comprehensive and integrated climate and housing planning framework.”
Efforts to mitigate the impacts of climate change would also be boosted under the governor’s plan: $1.2 billion in new funds to lessen wildfire risk through better forest management, $648 million for firefighting and $750 million in drought relief for residents, agriculture and wildlife habitats.
State subsidies to encourage the purchase and use of zero-emission vehicles would sharply increase under Newsom’s budget — a $10 billion, six-year effort when coupled with actions taken last year. Rebates for electric vehicle buyers would expand, more money would be set aside for building charging stations and the state would earmark almost $3.5 billion for zeroemission school buses, transit buses and heavy-duty trucks that ship containers to and from ports.
A variety of proposals in the new spending plan are aimed at helping low-income families, with an emphasis on children. Newsom’s proposal would index the state’s $1,000 “Young Child Tax Credit” for inflation, allowing the annual subsidy to grow over time, beginning with the 2022 tax year. The budget also seeks to roll back a longstanding law that reduces child support payments to a parent who is a former recipient of government assistance, such as the state’s welfare-to-work program, CalWORKs. Doing so would lower government recoupment receipts by $187 million.
Still, advocates urged Newsom and lawmakers to do more.
“One in eight children in California depends on a local child support agency to deliver the dollars that sustain their food, clothing, shelter and health care,” said Greg Wilson, executive director of the Child Support Directors Association of California. “While state revenues have soared to unprecedented heights, California children and families face a relentless epidemic of child poverty.”
The state’s lowest-income earners receive health care services through MediCal, estimated to offer coverage to 14.2 million Californians by later this year — some 36 percent of all state residents.
Few changes to the program are likely to receive as much attention as Newsom’s embrace of eligibility for any resident, regardless of immigration status, who qualifies based on income.
Newsom’s proposal to eliminate eligibility by age and extend coverage to an estimated 700,000 people who otherwise meet income requirements will cost $613.5 million in state funds during the current fiscal year and $2.2 billion each year after when fully implemented in 2024. The state’s overall Medi-Cal budget is $132.7 billion. The program will cover approximately 14 million Californians during the 202223 fiscal year.