Newsom calls revised budget ‘transformational’
Cash surplus will boost health care, rebates and more.
SACRAMENTO — Gov. Gavin Newsom unveiled a $267.8 billion revised budget plan Friday in which he promised “generational and transformational” spending to narrow California’s deep inequities, including funds for health care for undocumented immigrants and expanded broadband internet access.
His plan, subject to approval from lawmakers, is nearly 18% larger than his initial January proposal, reflecting a quickerthanexpected economic recovery from the coronavirus pandemic that has given the state a record surplus and brought generous financial support from the federal government.
The sharp turnaround in California’s finances — a year after Newsom worked with lawmakers to close what his administration expected would be an unprecedented $54.3 billion deficit — has shined good fortune on the governor at a politically opportune moment. Facing a likely recall election this fall, Newsom appeared before the public Friday proposing massive new ongoing and onetime funding for tax rebates, wildfire preparedness, universities, homeless housing, climate resilience, universal prekindergarten and even the 2028 Los Angeles Olympics.
This budget “is going to set this state up for not just a comeback, but an extraordinary decade, arguable century, ahead,” Newsom said during a news conference in Sacramento.
Rebounding tax revenues have given the state an eyepopping projected $75.7 billion surplus, which will be used to replenish reserve accounts to $24.4 billion, bolster guaranteed education funding and still leave $38 billion for officials to spend at their discretion. The governor will negotiate over the next month with the Legislature, which must pass a balanced budget by June 15 or forgo its pay. In a statement, Assembly Speaker Anthony Rendon, DLakewood (Los Angeles County), highlighted subsidized child care and college
scholarships as two areas where lawmakers would push for additional funding.
Newsom traveled across California this week in a campaignstyle tour to preview several of his budget priorities, drawing criticism from Republican rivals that he was grandstanding to shore up his support from voters ahead of the expected recall vote.
Perhaps the most notable new item the governor announced Friday was a proposal to include undocumented immigrants age 60 or older in MediCal, the state’s health care program for the poor, by May 2022. Immigrants from lowincome families are already eligible for coverage until age 26.
State finance officials project the program would serve an additional 89,000 Californians within three years, at a cost of $1 billion annually — a significant expansion, but less than Democratic legislators have sought to make all undocumented adults eligible for coverage.
“Onetime surpluses can quickly give way to onetime deficits,” said Newsom, who added that a bigger commitment would have taken away from the ability to spend in other areas: “You can’t do everything, but you can make progress.”
Under Newsom’s plan,
the University of California and California State University would get a $1.1 billion funding increase, while the state would spend $4 billion over two years to build new student housing, $433 million to help turn Humboldt State University into a polytechnic campus and $115 million to develop degrees that would not require students to buy textbooks.
The governor is also proposing $7 billion to expand broadband internet access, after many students in rural areas struggled to access their online classes over the past year; a $1.5 billion beautification project to clean up trash across the state; $1 billion for Los Angeles transit projects needed for the 2028 Olympics; $708 million for wildfire prepardness projects; $650 million to help lowincome Californians buy electric vehicles amid a push to phase out gaspowered cars; and $35 million to support pilot programs for a guaranteed income.
Among the proposals Newsom unveiled earlier this week was an $8 billion stimulus package to send $600 checks to middleincome households that were left out of a first round of direct payments this spring. With the state’s overflowing coffers expected to trigger a spending cap for only the second time since voters approved it in 1979, Newsom said the
stimulus checks could fulfill a requirement to return half of the excess revenue to taxpayers.
Republicans have said the record surplus is further proof that Californians are overtaxed and called on Newsom to do more to return money. Former San Diego Mayor Kevin Faulconer, who is running in the recall, suggested a tax cut for residents who make less than $100,000.
Newsom on Friday defended California’s progressive income tax
rate as beneficial to lowincome and middleclass households and noted that the state’s two most recent tax increases had been approved by voters.
The governor has also already proposed a $7 billion extension of Homekey, his signature program to create more supportive housing for homeless Californians by converting hotels, motels and other vacant buildings into living quarters, as well as $5 billion to help finance affordable housing projects, provide rent support for families and pay for other homelessness prevention services.
With the pot of money that California is required by law to spend on K12 schools and community colleges rising to a record $93.7 billion, Newsom introduced plans to phase in universal prekindergarten for 4yearolds and comprehensive afterschool and summer school programs in lowincome districts over the next few years, potentially creating billions of dollars in new ongoing spending. He said schools would be required to return full time for inperson instruction in the fall to access their state funding.
Newsom also pitched $5.1 billion for water infrastructure and conservation projects as the state faces another drought, $3.3 billion to recruit and train new teachers, and $1.5 billion to help small businesses recover from the pandemic.
California is further benefiting from nearly $27 billion in aid from the most recent federal coronavirus relief bill. With broad discretion on how to use the money, the governor’s proposals include $2 billion to cover unpaid utility bills and $2 billion to create college savings accounts for children from lowincome families.