State budget

SPENDING PLAN — California Gov. Gavin Newsom presents his first state budget during a news conference Thursday in Sacramento.

SACRAMENTO — California Gov. Gavin Newsom proposed a $144 billion general fund budget on Thursday that’s up 4% from the current year and predicted a $21.4 billion surplus from robust tax collections and slower growth of state health care costs.

It’s the largest projected surplus since at least 2000, according to state finance officials.

The new governor’s budget de­votes $13.6 billion of the windfall to build the state’s reserves and to pay down state debt and grow­ing pension liabilities. It’s in keep­ing with his promise to fol­low the fiscally frugal path of his predecessor, termed-out Gov. Jerry Brown.

Like Brown, Newsom said he is girding the state against an in­ev­it­able recession.

“The message we are advancing here is discipline, building a strong foundation on which everything else can be built,” Newsom told re­port­ers in Sacramento.

Newsom’s proposal kicks off neg­o­tiations with the Legislature. Law­makers have until June 15 to ap­prove a balanced spending plan or lose pay. The surplus Newsom pro­jected is well over the roughly $15 billion predicted by the non-par­tis­an legislative analyst’s office.

The extra $6 billion gives New­som room to spend more on health care, education and housing. About 86% of his new spending is for one-time expenses, Newsom said.

He’s made early child­hood education a cen­tral focus of his new ad­min­istration. His budget pro­poses $750 million for kin­der­garten programs and $500 million for early child care infrastructure. He also wants to boost a tax cred­it for families by more than half-a-billion dollars and expand access to the credit to 400,000 more low-in­come workers.

Newsom brands his edu­cation focus as “cradle to car­eer,” and his budget pro­posed $1.4 billion in fresh spending for higher edu­cation. Much of it, about $400 million, is for community colleges. New­som wants them to use the money to make the second year of school tuition free, although it already is for many low-income students.

Housing, too, is a major focus in Newsom’s budget. California is experiencing a major affordable housing crisis, with the number of available homes far below the need and rapidly rising prices and rents.

Newsom’s pledging $1.75 billion toward the crisis, saying he’s “not playing small ball.” He wants to take a carrot-and-stick ap­proach to in­cen­tiv­ize com­mu­nities to build more home­less shel­ters and hous­ing, and he proposes threat­ening trans­portation money if local governments don’t meet their goals. That pro­posal may be con­tro­versial in the Legislature.

Newsom has also proposed expanding state-funded health care to low-income people living in the country illegally until their 26th birthday, up from a current cutoff age of 19. He wants to increase subsidies for people who buy their own insurance, rather than getting it from an employer or government program. His health proposals would cost $760 million a year.

Newsom emphasized pay­­ing off debts ac­cum­u­lated over the years. He wants to make a $3 bil­lion one-time payment to Cal­if­ornia’s teacher pen­sion fund on behalf of schools to help districts that are seeing more of their budgets eaten up by pen­sion obligations.

Democrats praised New­som’s ambitious proposals while Republicans said he wasn’t doing enough to guard against an inevitable re­ces­sion.

Republican As­sem­bly­­man Jay Ober­nol­te, vice chairman of the chamber’s budget com­mit­tee, applauded New­som’s plans to save money but ques­tioned his efforts to ex­pand Medi-Cal and other programs.

“We must remember that creating new programs that would only have to be cut in a recession would be fool­ish,” he said.

“The governor promised bold ideas when he was run­ning, and he certainly moved in that direction today, said state Sen. Scott Wilk, R-Santa Clarita, whose district includes the An­tel­ope Valley. “We can all agree that healthcare must be more affordable and accessible, a ZIP code should not determine the qual­ity of a child’s ed­u­cation, and that we have many unmet social chal­len­ges — but how we pay for these expansions while ef­fect­ively addressing a crum­bling infrastructure and volatile tax base re­mains a challenge.

“I applaud his attempt to think outside the box and appreciate that many of these proposals are one time investments, but was dis­ap­pointed to learn the gov­ern­or has continued to fund the bullet train, rath­er than use those dollars on more pressing needs.”

Newsom teased big chan­ges to the state’s ju­ven­ile justice program, pled­ging to end it “as we know it” and transition it to the state’s Health and Human Services Agency.

He also teased a re­struc­turing of the state’s troub­led high-speed rail project, one of Brown’s pri­or­ities, and barely men­tioned climate change, anoth­er signature Brown issue.

Newsome also pitched a significant expansion of California’s paid leave pro­gram, which allows new par­ents to receive a portion of their paycheck while away from work following the birth or adoption of a child. Newsom wants to even­tu­ally offer six months of leave to be split between the parents, though his ini­tial budget will include a smaller step in that direction.

California currently replaces a portion of wages for six weeks for new parents, and birth mothers can take an additional six weeks of disability leave. The program is funded through a payroll tax. It’s unclear how Newsom would pay for a full six-month program.

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(1) comment

Jimzan

I like the idea of paying 3 billion dollars to the "Cal­if­ornia’s teacher pen­sion fund". That is the actions of someone that realizes their debt and is working to get out of that debt. I do believe we are heading into a recession if not even a depression, with 21 Trillion on the books, here comes some pain. But California is not called the Golden State for nothing...let's just spend the "Gold" wisely.

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