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Top cuts, changes in California governor’s revised budget

SACRAMENTO, Calif. (AP) — California Democratic Gov. Gavin Newsom presented a revised $203 billion budget proposal to state lawmakers Thursday, reflecting an economy and tax revenues hobbled by the coronavirus pandemic. The Legislature must approve a budget by mid-June, in time for the new fiscal year that begins July 1. Newsom says some the most damaging reductions could be eased if the federal government approves a proposed financial rescue plan for states.

Here’s a look at some of the biggest changes:

FALLING REVENUES:

California’s proposed budget plummeted from a $6 billion projected surplus in the upcoming budget year in January to an anticipated deficit of $54.3 billion now. Sales, personal income and corporate taxes are forecast to drop by a combined 22%.

FILLING THE BUDGET HOLE:

Rainy day reserves socked away during the good times will make up for about 45% of the hole. Funding will also come from the federal Coronavirus Aid, Relief, and Economic Security Act and doing away with many of the program expansions Newsom proposed in January.

Nearly 20% would be fiscal maneuvers like borrowing from special funds and deferring costs into future budget years. Another 26% would come from cuts that Newsom says won’t be triggered if Congress and President Donald Trump approve more federal aid to states.

Another $4.5 billion comes from tax increases, including eliminating tax deductions on some businesses.

A 10% pay cut for state employees would save about $2.8 billion overall. The administration will negotiate the cuts with collective bargaining units, but it could mean furloughs like those during the 2008-2009 Great Recession.

K-12 EDUCATION

His budget plan went from an ambitious proposal to spend $84 billion on K-12 education and community colleges to an assortment of budget maneuvers to spare schools from what otherwise would be a $19 billion cut. They include giving schools a share of the federal CARES Act money that could go to extending the school year and easing their mandatory pension contributions. But overall K-12 education funding will fall $7.5 billion from Newsom’s January proposal, or by $4.2 billion compared with the current budget.

Gone is is January proposal to provide preschool for all children. Newsom said he wouldn’t touch one proposal: Increased spending on special education programs.

HIGHER EDUCATION

The budget plan cuts state colleges and universities by 10% and eliminates a proposed 5% increase for state colleges and universities. But he proposes giving the University of California, California State University and community college systems a combined nearly $1.4 billion in federal CARES Act funds.

HEALTH CARE

Newsom is abandoning, for now, his January proposal to make California the first state to sell its own prescription drugs in a bid to stem spiraling prices. But he’s sticking with his proposal for a tax on nicotine to curb vaping and said he still wants lawmakers to ban flavored tobacco products.

Also gone is his January plan to provide coverage for 27,000 older low-income immigrants who are in the country illegally, which saves $113 million. California last year became the first state to offer full health benefits to low-income adults 25 and younger living in the country illegally.

HOUSING AND HOMELESSNESS

Newsom wants to use about $750 million in federal funds to buy some of the hotels that the state has begun leasing to house the homeless, which would be turned over to local governments and nonprofit organizations to provide permanent housing. But other proposals from his January plan would disappear, including about $700 million for homeless social services.

LAW ENFORCEMENT

Newsom doubled down on his January proposal to close one state prison, now saying he wants to close two undisclosed prisons in the coming years. He also proposes to consolidate some inmate firefighting camps and parole offices to save money.

He shifted his plan to move the Division of Juvenile Justice from the state corrections department to the Health and Human Services Agency, instead adopting a plan to gradually have all young offenders in county-run programs.

Newsom is still seeking to shorten probation to a maximum of two years, down from five for felonies, and to let ex-felons earn their way off supervision in just a year. He also wants to expand credits that would allow inmates to leave prison more quickly.

WILDFIRES

He’s sticking with his January proposal to spend more than $200 million to hire more than 500 additional state firefighters and about 100 support personnel, partly to make up for fewer inmate firefighters who have been released earlier to help prevent the spread of coronavirus.


Associated Press writers Cuneyt Dil, Kathleen Ronayne, Don Thompson in Sacramento also contributed to this report.

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The Associated Press