Will Gavin Newsom stick to his promise of fiscal prudence?
Did Gavin Newsom mean what he said? Let’s hope so.
“We will live within our means,” the governor- elect told the Sacramento Bee earlier this week. “We’re not going to deviate from being fiscally prudent.”
Newsom made the comments after the newly swornin, Democratic- controlled Legislature met just long enough for lawmakers to introduce a flurry of costly bills:
Expanding Medi- Cal eligibility to adults living illegally in the state. K-12 school funding increases. More money for the state’s preschool program. Making the second year of community college free. Bringing back redevelopment agencies, which require the state to backfill local governments for lost tax revenues.
The list of more than 100 bills introduced Monday, the first day of the legislative session, would require more than $40 billion in new state spending, according to the Bee.
Some of the ideas make good policy sense. Some are ridiculous. What’s clear is that the state doesn’t have the money for most of them. So, let’s hope Newsom meant it when he said that “all of this will be whittled down” to keep the state on a fiscally prudent track.
Unless someone, specifically Newsom, injects some sanity into this debate, we have the makings of a perfect financial storm:
First, Democrats, fresh off their stunningly successful election, have a supermajority in the Legislature and are eager to expand government spending for programs they have long sought.
Second, Gov. Jerry Brown, who has for eight years provided a check on the freespending inclinations of the legislative majority, is about to leave the Capitol.
Third, state Legislative Analyst Mac Taylor last month released a forecast of a $14.5 billion reserve fund by the end of the 2019-20 fiscal year and a $14.8 billion budget surplus.
“The budget is in remarkably good shape,” Taylor wrote. It was an unfortunate characterization that has led many to claim that the state is flush with cash.
Nothing could be further from the truth. The reserve fund would be wiped out in a matter of months if the state hit a long overdue economic downturn.
And the surplus in the annual state budget only exists because, as we previously noted, the state has strung out payments on its staggering, $257 billion debt for public employees’ pensions and retiree health coverage. If the state responsibly addressed that, the installment payments would swallow up the surplus.
The state’s best, and perhaps only, hope of maintaining fiscal sanity rests with Newsom — the same person who campaigned with big visions that carry big price tags.
Which is why his promise this week that the state will maintain a fiscally prudent path was welcome news. Next month, when he releases his proposed budget for the 201920 fiscal year, we’ll find out if he means it — and what he means when he says it.