Newsom’s 1st budget postpones big battles
$209 billion spending plan achieves political balance
Gov. Gavin Newsom threaded the political needle with his first proposed state budget, putting out a spending plan that’s both bold and cautious, ducking the type of pitched battles that many of his more grandiose campaign promises might have provoked.
The $209 billion fiscal blueprint has plenty to delight his progressive backers, but the new governor also worked to avoid enraging more fiscally conservative Californians. Newsom leavened his calls for social measures like boosting welfare checks and providing health care for more undocumented immigrants with plans to pay off the state’s debts, boost California’s budget reserves and make a down payment on closing the public pension shortfall.
“I thought it was an adept way of making it absolutely clear that it’s a new day in the governor’s office, but also that (Newsom) is going to build on (former Gov.) Jerry Brown’s foundation,” said Raphael Sonenshein, executive director of the Pat Brown Institute for Public Affairs at California State University Los Angeles. “He showed it will be his governorship, but did it respectfully.”
It wasn’t an accident that Newsom opened Thursday’s budget presentation by talking about what he’s saving, not what he’s spending.
“We are preparing for uncertain times,” he said, noting that more than 86 percent of the new spending in the budget would go for one-time expenses, such as building and renovating classrooms to allow school districts to start full-day kindergartens, providing cash for deferred maintenance on state college and university campuses, and training new child care workers.
One-time expenses are just that: money the state spends only this coming year. The economy could stall next year and state revenue dry up — onetime spending creates no new programs to be stranded by the outgoing tide.
Newsom would send more than $13 billion of California’s estimated $21.4 billion surplus for fiscal 2019-20 back to the state. That money would repay what’s left of the debt from the state’s cash crunch of a decade ago, pump up a rainy-day fund and a separate emergency reserve — think wildfires — and put money into California’s cash-starved public pension funds, a longtime concern of GOP legislators.
While the $4.8 billion pension payment is little more than a rounding error to the estimated $257 billion shortfall for public pensions, it can be seen as an olive branch from Newsom to Republicans, who responded with at least measured approval.
With uncertain economic futures for both the state and the nation, California shouldn’t overcommit to new programs, said Assembly Republican leader Marie Waldron of Escondido (San Diego County). “I applaud the governor’s decision to increase our reserves and pay down a portion of the state’s wall of debt,” she said.
Although he led his presentation with Brown-like frugality, Newsom saved much of his enthusiasm for the type of social program improvements that his predecessor was reluctant to fund.
People on the state welfare program known as CalWORKS would see their monthly checks rise dramatically, making California’s payments more than $100 higher than those in any other state. College students with young children could see their Cal Grant awards triple. The amount of state money available for tax credits for low-income working families would rise from $400 million to $1 billion, with families with young children getting an additional $500.
Then there’s the additional $260 million to provide Medi-Cal benefits to adults ages 19 to 25, regardless of immigration status.
Those measures brought cheers from progressive interest groups.
“The children of California have a champion in the governor’s office,” said James Steyer of Common Sense Kids Action, which wants to see greater access to early education and health care. “This is an exciting time for advocates of children’s equity.”
That support was echoed by groups focusing on education, poverty, homelessness and other social issues.
The budget also suggests that Newsom is channeling the previous governor by avoiding political fights he can’t win — at least for now.
But in many of those cases, the new governor not only reaffirmed his support for some extremely innovative — and extremely expensive — programs he called for during the campaign, but also took the first steps toward making them happen.
Newsom said, for example, that the state would seek to provide six months of paid leave for new and adoptive parents.
“We’re committed to this, not just interested,” he said.
But the governor admitted that the funding is not there. He said he would convene a task force to consider ways to pay for a phased-in expansion of the state’s current family leave program, which provides up to six weeks of paid time off.
Similarly, free preschool for all 4-year-olds was a top campaign issue for Newsom and has long had the enthusiastic backing of many Democratic leaders, although not from Brown. But that program will cost more than $2 billion a year, with the price rising if 3-year-olds are included, as Newsom has suggested.
So in this budget, the governor calls only for expanding access to existing programs for 4-year-olds from lowincome families, and developing a plan to provide and pay for universal preschool, pushing that budget fight into the future.
For months, Newsom has been tamping down expectations on universal health care, a signature issue for him and many progressive Democrats. Many in the party’s left wing want a single-payer model, in which the state would be the sole organizer of health care delivery.
The cost of that would be huge, however, and Newsom has cautioned that it would be years in the making. In the meantime, though, he wants to make many more Californians eligible for state-subsidized health insurance, an early step toward universal coverage.
“There’s always a bit of a risk introducing something as a ‘down payment’ or a ‘one-time expense,’ since a lot of people don’t look at the fine print” and assume the program is guaranteed for the future, said Sonenshein of the Brown Institute. “But there’s tremendous interest in single-payer among progressives, so Newsom had to get in something to show that it’s moving ahead.”
Despite Newsom’s assurance that he has worked closely with legislative leaders and that the budget “reflects their priorities and not just mine,” the January spending plan is the starting point, not the finish line. Between now and the June 15 budget deadline, there will be lots of impassioned backand-forth between the governor and legislators seeking money for their own pet projects.
“Newsom did a good job rolling out his vision for California, but he can’t do everything,” Sonenshein said. “Now he will have to decide which of his programs he really wants to fight for and what goes into second place.”
Gov. Gavin Newsom presents his first budget, a $209 billion blueprint with many one-time expenditures.