California Governor Gavin Newsom has introduced a revised budget proposal to address a $28 billion deficit, necessitating significant budget cuts, including the elimination of 10,000 vacant state jobs. The plan includes a variety of strategies such as additional cuts, new revenue or borrowing, delays, and fund shifts.
Among the proposed cuts are nearly 8% reductions to state operations, impacting housing, health, and human services programs. The budget would also pause the expansion of a state-subsidized childcare program and cut funding for homeless housing assistance and prevention.
Additionally, the plan delays a food assistance benefit program expansion and spreads reserves over two years to address the deficit. Despite these cuts, some social safety net programs, such as the final piece of the Medi-Cal expansion, would be maintained.
Revised Budget of $288 Billion Announced by California Governor Gavin Newsom
Newsom emphasized that the budget fixes aim to support existing core programs without major cuts, although deeper reductions have been made. He reiterated his opposition to corporate tax increases, stating a need to live within means and improve efficiency.
The budget announcement initiates negotiations with the Legislature, with Assembly leaders expressing concern about proposed cuts and vowing to protect core programs. The budget must be passed by June 15 for lawmakers to receive payment, with the new fiscal year beginning on July 1.
Regarding climate initiatives, Newsom stated there would be “no material cuts” to California’s climate agenda, shifting $2.5 billion in climate spending to a fund generated by industrial polluters’ emissions. This fund historically supports programs such as clean energy and transit.
The shift from surplus to deficit over the past two years is attributed to the COVID-19 pandemic’s impact on the economy, particularly affecting high-income earners and industries like tourism. Complications in assessing the state’s finances arose due to delays in tax filings caused by IRS deferrals, further complicating the budget outlook.
