SACRAMENTO, Calif. (CN) — California’s Senate and Assembly on Thursday approved a plan for next year’s state budget, a move meant to meet a constitutional deadline while negotiations continue with Governor Gavin Newsom on a final spending plan.
The state has until the end of the month to come to an agreement about how to address a $31.5 billion deficit, just a year after enjoying a fiscal surplus.
In a joint statement Monday, Senate President Pro Tem Toni Atkins and Assembly Speaker Anthony Rendon said, “The Senate and Assembly have reached a two-party agreement on a balanced and responsible budget, and we are continuing to negotiate and make progress on three-party final budget.”
Assembly Bill 10 – also known as Senate Bill 101 – recommends holding more than $26 billion in the general reserve. Senator Nancy Skinner, a Democrat from Berkeley, called it a responsible approach to continue expanding economic opportunity while responding to housing and climate crises, without increasing taxes other than the managed care tax.
The nonpartisan watchdog Legislative Analyst’s Office reported that the new package does not use any of the state's reserves to address the deficit. Major differences between it and Newsom’s proposal from May include changes to the transit capital funding, restoring $1 billion to his cuts and letting local transit agencies have flexibility to use the money.
Lawmakers want to restore funding for activities such as coastal resilience and water recycling, cutting dollars for energy reliability programs and water-related voluntary agreement projects. They also want to use additional funds for purchasing zero-emission buses and restore $200 million for the Active Transportation Program.
The proposal would also adopt the office’s estimates of local property tax revenue, increasing the Proposition 98 guarantee by $2.1 billion across 2024 while rejecting most proposed cuts to discretionary block grants.
Republicans voiced opposition to the Democratic majority's proposal Thursday, saying that with income taxes not due until October, the state cannot know how much tax revenue will be available. They also claimed that businesses will continue to leave California, despite the fact that the state has the fourth largest economy in the world and has added more than 3 million jobs since April 2020.
Assemblymember Vince Fong, a Republican from Bakersfield, said the proposed budget wastes billions of dollars on the ongoing high speed rail project.
“This budget exemplifies a broken process, one that should be significantly improved,” Fong said.
The joint budget agreement passed both houses Thursday, with Republicans voting no.
Newsom’s budget proposals and trailer bill recommendations have already taken some heat this year.
The American Civil Liberties Union and other police accountability groups on Wednesday opposed a new trailer bill from Newsom to no longer require the state agency responsible for decertifying police officers for bad conduct from providing public case. records. Instead, the California Commission on Peace Officer Standards and Training wants local agencies where officers worked to be responsible for releasing those records.
The proposal is one of about 185 pieces of trailer bill language on different issues that Newsom is attempting to use this year, according to the California Department of Finance. Proposed laws in California typically go through the legislative process, which requires months of hearings and votes in the Senate and Assembly before going to the governor’s desk. Budget trailer bills typically have one hearing in the Senate and Assembly before full floor votes and require a simple majority to pass, going into effect immediately once signed.
Newsom also took heat this month for some proposed cuts in his revised budget proposal, with no money included for Market Match – a nutrition incentive program that lets CalFresh shoppers double benefits for fruits and vegetables at farmers’ markets – and cuts to funding for multiple public transportation systems.
Senator Scott Wiener, a San Francisco Democrat, wrote on Twitter that Bay Area Rapid Transit warned of eliminating weekend service and an entire line. San Francisco’s Muni has warned of phasing out 15-20 bus lines.
“The governor’s proposed budget did not include any state support to solve this problem,” Wiener said. “Instead the governor proposed to slash $2 billion in previously appropriated transit capital funds, which have already been allocated to projects.”
After protests in San Francisco, the Senate and Assembly’s joint budget now includes restoring the $2 billion proposed transit capital, and allows that particular fund — now restored to $4 billion — to be used flexibly for either capital or operations. But it is unclear how much of the cap-and-trade funds would go to Bay Area transit agencies if the proposal is approved by the governor or whether the transit subsidy would come with policy strings attached.
State lawmakers must come to a final agreement with Newsom, with a signed budget for the new fiscal year, by July 1.
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