California Governor Newsom Proposes Record $213 Billion Budget


(Bloomberg) — California Governor Gavin Newsom on Monday unveiled a $213 billion general fund budget for the next fiscal year, buttressed by a $45.7 billion surplus as the most populous U.S. state enjoys strong tax revenue in the lopsided recovery from the pandemic.

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The spending plan, up almost 1.4% from the current year, allocates billions of dollars to coronavirus response, mitigating wildfires and drought, easing homelessness and extending health care coverage to all undocumented residents.

“This year, we are in a substantially better place than we projected last January,” said Newsom, a Democrat up for a second term in November, during a briefing in Sacramento. “I am very proud of California’s capacity to make investments and to expand supports.”

Newsom will revise the budget in May accounting for the latest revenue figures. Lawmakers have to approve it by June 15 or forgo pay. Some of what he proposes uses federal dollars and other sources apart from the general fund.

Of the surplus, $20.6 billion can be used for discretionary purposes. Reserves, including constitutionally mandated deposits, total $34.6 billion. The budget would pay down unfunded pension liabilities with additional $3.9 billion in payments to achieve savings. The state would spend a total $20,855 per pupil, a record.

Newsom’s spending plans include:

  • $2.7 billion to bolster Covid testing and vaccinations

  • $1.2 billion over two years on wildfire mitigation

  • $750 million for drought relief

  • $2 billion for mental health services for homeless people and clearing encampments

  • $2 billion in grants and tax credits to spur more affordable housing

  • $1.6 billion for community colleges

  • $3 billion over two years to pay down unemployment insurance trust fund debt owed to the federal government

  • $6 billion over five years to support zero-emission vehicles and charging infrastructure

  • $356 million over three years, including $132 million next year, in grants to law enforcement to combat retail crime

With a progressive tax system that rakes in more revenue when the income of the highest earners rises, California continues to collect more than it forecast. Wealthy residents have reaped the benefits of rising stock prices and stable employment even as lower-income workers lost their jobs during the pandemic. The top 1% of earners pay nearly half of personal income-tax collections.

This is the second year of the pandemic that the state’s notching a massive surplus. The current budget spends approximately $210 billion.

(Updates with details throughout)

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