With California budget surplus projected at $97 million, Newsom offers driver rebates, more funding for reproductive health
Updated at 12:56 p.m.
California’s state budget will surpass $300 billion this year, a surprising rebound from a COVID-19-induced deficit in 2020 and a significant jump beyond pre-pandemic levels.
State lawmakers and Gov. Gavin Newsom will have a $97.5 billion surplus to allocate this year, though half of that is to be earmarked for education and other purposes. This is the second year in a row that California has faced a substantial surplus due in large part to income tax revenues from the state’s wealthy.
In 2019, the budget was $213 billion.
Newsom wants to use some of the surplus to send rebates to California drivers and $1,500 bonuses to hospital and nursing home workers under his proposed $300.6 billion budget plan. It includes $227.4 billion in general fund expenditures and $73.2 billion in bonds and special funds.
The governor’s administration unveiled the reimbursement proposals before its presentation of the revised budget on Friday morning. It also includes billions in additional aid for rent assistance and utility bills for Californians affected by the pandemic.
The governor’s revised budget proposal is a refined version of an earlier spending plan he originally released in January, using the most recent tax revenue data. It’s just a wish list and part of a long process in which state leaders decide how to spend California taxpayers’ money. Newsom and key state lawmakers will negotiate the details over the next six weeks.
The legislature must approve a state budget by June 15, and it must be signed by the governor by June 30 to take effect July 1 in the following fiscal year. See the process timeline here.
Here are the proposals announced by the governor:
Inflation and Financial Aid
With gas prices stuck at well over $5 a gallon in most of the state and inflation at a 40-year high, Newsom doubled down on his earlier proposal to send $400 in rebates to registered vehicle owners, up to $800 per person. The Department of Finance estimates that the refunds would cost $11.5 billion.
For those who don’t own a car, Newsom’s plan would also include $750 million in grants to transit agencies to suspend their fare collection for three months and make public transit free.
The governor originally floated the idea in March, but remains at an impasse with Assembly Speaker Anthony Rendon and pro Tempore Senate Speaker Toni Atkins, who say they would prefer targeted aid to help people and families. low and middle income families.
Other lawmakers, particularly Republicans, pushed to suspend the 51-cent-per-gallon gas tax for a year, but Newsom and top Democrats said there was no way to guarantee that oil companies would pass these savings on to consumers.
Newsom’s proposal also includes:
- $2.7 billion in additional funding for the state’s rent relief program to help those who applied before the March 31 deadline.
- $1.4 billion to help pay overdue utility bills for Californians affected by the pandemic. The state approved a similar amount in 2021.
- $933 million to provide $1,500 “retention bonuses” to workers in hospitals and nursing homes, which have been hit hard by the pandemic and continue to face staffing shortages.
- $439 million to suspend the diesel sales tax for one year. Department of Finance officials point out that, unlike the gas tax, the diesel tax is also a sales tax. “As the price of diesel increases, the amount we collect increases,” said chief financial officer Keely Bosler. “In this case, we saw a lot of value in reducing that.”
- $304 million to increase insurance premium assistance for approximately 700,000 Californians on eligible covered California plans.
- $157 million to eliminate up to $595 in monthly child care costs for approximately 40,000 low-income families.
Newsom announced Wednesday that he would offer $125 million to expand access to reproductive care, including abortion, in California.
That’s more than the $68 million he offered in January. The funding increase comes after a leaked document showed the US Supreme Court was set to strike down national abortion protections.
California providers are expecting a flood of new patients traveling for abortions from other states that plan to clamp down on the procedure.
Newsom’s proposal includes $40 million in vendor grants and $1 million to create a website to connect people with information and services.
Housing and Homelessness
Newsom’s revised budget earmarks $2.7 billion of the surplus for emergency housing assistance, bringing the state’s overall spending on assisted housing to more than $8 billion. The proposal aims to help qualified low-income tenants who applied for housing assistance before March 31 to avoid eviction.
California passed legislation in March providing extra time for thousands of tenants who are in the process of acquiring rental assistance. The new law protects tenants until June 20 when applications are processed.
For homelessness initiatives, Newsom’s May budget proposes spending about $2.7 billion, up from his $2 billion proposal in January.
The additional funding would include spending $500 million on transitional housing such as tiny homes and crisis response services.
“We want more immediate action,” Newsom said during his budget press conference.
It also calls for a $150 million expansion of Homekey, an initiative that pays local governments to buy and convert motels and hotels into long-term housing for homeless people. Homekey has provided funding for 10,000 homeless housing units across the state since its launch two years ago, according to the governor’s office.
The initiative is part of a larger push to create non-congregational settings to house homeless residents, msome refuse to live in group shelters because they feel they are unsafe or do not allow people to live with a partner or pet, according to those who work with residents homelessness and interviews with homeless people.
Additionally, the revised budget proposal would allocate $65 million to the CARE Court Governor’s proposal. the controversial project would establish a new civilian justice system and require treatment for up to 12,000 people with serious mental illness and addiction, many of whom are homeless.
Newsom’s $2.7 billion spending proposal adds to the $12 billion allocated by the state last year for the next two years of homelessness initiatives. This larger amount of expenditure would increase housing and behavioral health care. Combined, that would pay for 55,000 new housing and treatment slots, according to the governor’s office.
In January, Newsom earmarked $500 million for homeless camp cleanup grants for local governments, a 10-fold increase over last year’s budget for this program due to strong demand for subsidies.
Here is a timeline of California’s annual budget adoption process:
- January: The governor submits a proposed spending plan to the Legislature by the January 10 constitutional deadline. Here’s what Newsom came up with.
- May: The governor refines the budget proposal using clearer revenue figures provided by the Ministry of Finance. This is called the “May review”.
- June: Legislators have until June 15 to pass a budget. The spending plan is typically spread across multiple bills, including “follow-on bills” or smaller appropriations that may pass after the June 15 deadline. The governor must sign a budget by June 30.
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