SACRAMENTO, Calif. (CN) – Reaching into a predicted $21 billion surplus, California Gov. Gavin Newsom on Thursday called for major spending to cure some of the state’s most complex problems, including billions for affordable housing, homelessness programs and unfunded public employee pensions.
Newsom’s proposal includes $144 billion in general-fund spending, a 3.6 percent increase or $8 billion over the current budget, making it potentially the largest in state history. The $209 billion total budget bill calls for an additional $65 billion in special funds and bonds and now goes to the Legislature for bargaining.
The new governor called his first budget proposal “structurally balanced” and claimed that if passed, the state will be committed to pay off all debt related to the Great Recession.
“The message we are advancing here is discipline, building a strong foundation on which everything else can be built,” Newsom said at his budget introduction.
Spending increased routinely under former Gov. Jerry Brown’s last eight years thanks to a booming economy that is now the world’s fifth largest, but he was able to safeguard the surplus and avoid discretionary spending. Brown pushed back on new permanent spending proposals by the Legislature and warned reporters at every turn that a recession was lurking.
While his budget bill includes a rash of discretionary one-time spending, Newsom said he’s mindful of how fast the Golden State’s flushed finances can turn pale in a state so heavily-reliant on income taxes paid by its richest residents. His budget avoids new long-term commitments, with 86 percent of the proposed new spending classified as one-time expenditures.
The spending bill includes $13.6 billion in what Newsom calls “budgetary resiliency,” with $4 billion to pay down outstanding debt, $4.8 billion for the state’s reserves and $4.8 billion to address unfunded retirement liabilities.
On the campaign trail, Newsom, a father of four, talked about the need to open up free preschool options to more low-income families and improve kindergarten programs. He and advocates point to studies showing that first-rate preschool and kindergarten programs particularly benefit disadvantaged children and dual-language learners.
His first spending plan reflects that campaign desire with $81 billion solely for K-12 and community college, including nearly $1.5 billion for new kindergarten facilities and child care worker training. The Democrat is also pitching the overwhelmingly Democratic Legislature to provide workers with six months of paid leave after the birth of a child.
“It’s a no-damn-brainer,” Newsom said of expanded maternity leave. “Business should love it, the American people should love it and California should love it.”
Newsom detailed a multitude of high-profile budget items, such a plan to overhaul the state’s housing plans and a $500 million infusion to cities for new homeless shelters.
With California’s largest cities mired in a housing shortage, the former San Francisco mayor wants to give cities and counties grants to help them develop ways to meet state-assigned short-term housing production goals.
He said if the municipalities meet their goals, up to $500 million will be available to spend for general purposes. The allowance for reaching housing targets would be calculated according to population, Newsom added.
“We’re not playing small ball on housing,” he said.
The approach is no doubt a radical jump from the status quo and could be unpopular with local leaders who prefer strict local control over housing decisions. Newsom warned that if cities don’t meet their goals, the state could potentially recoup the grant money by withholding funds from the landmark transportation package passed in 2017, Senate Bill 1.
Chair of the Senate Housing Committee, State Sen. Scott Wiener, D-San Francisco, said he “wholeheartedly” supports Newsom’s housing approach.
“California is in a deep housing crisis, with a 3.5 million home deficit, and the governor’s budget proposal recognizes that we must build much more housing at all income,” Wiener said in a statement.
To curb homelessness rates, Newsom proposed $500 million in one-time spending for local governments to build homeless shelters. To ensure the shelters are actually built, he wants the Legislature to expedite or waive environmental reviews that often plague construction in the Golden State.
“If you can create [environmental] waivers to expedite stadium projects, and we do all the time, we sure as hell should be able to do that for the 130,000 souls that are out on the damn streets and sidewalks in this state,” Newsom said.
As opposed to his predecessor’s short budget talks, Newsom talked to an auditorium full of reporters, elected officials and cabinet staff for more than 90 minutes.
The clean-shaven 51-year-old was clearly prepared: he rattled off explanations for his various proposals without glancing at notes, telling the crowd he “wanted to do justice to the magnitude of decisions” in the 175-page budget.
Republican leaders appreciated Newsom’s push to dedicate over $13 billion to paying down debt and stocking the state’s coffers.
“Our state liabilities are substantial, so we must avoid overcommitting the state with programs that will be threatened when our economy slows. I applaud the governor’s decision to increase our reserves and pay down a portion of the state’s wall of debt,” said Assembly Republican Leader Marie Waldron.
Newsom caught the auditorium off-guard during a question and answer session when he casually mentioned that the state would immediately start backfilling the pay of Californians that have been furloughed by the federal government shutdown. He told the impacted federal employees to “come in today” and apply for unemployment insurance. Newsom wasn’t sure of how much the gesture would cost the state, but added that the unemployment agency could handle it.
In the wide-ranging talk, the first-term governor pledged “more transparency” on two of the state’s most controversial and costly projects, the high-speed rail and California WaterFix, also called the Delta Tunnels. The budget bill does not include any new funding for the projects, with Newsom saying that he will address them both in an upcoming five-year plan.
Newsom’s first budget also made good on his promise to invest more state dollars in helping to house migrants seeking asylum in San Diego after crossing the U.S.-Mexico border and being found to have a credible fear of persecution in their home countries by immigration officials.
The budget proposes $25 million from the general fund – including $5 million made available this year – for an immigration rapid response program to assist community-based organizations and nonprofits already providing services to asylum-seekers. Another $75 million in general fund dollars was also proposed for ongoing immigration-related services, including assisting applicants to the Deferred Action for Childhood Arrivals program, naturalization and other immigration needs
Other new budget items include:
*$2 million planning and research grant toward a potential new California State University campus in Stockton
*$50 million to hire new public mental health practitioners
*$5.5 million for inmate literacy programs
*$16.5 million for an earthquake early warning system
*$50 million to expand outreach for the 2020 Census
*$25 million for safe drinking water programs
*$3 million to jumpstart an Alzheimer’s task force
“We are preparing for uncertain times and we are paying down debt in historic ways and we are paying down unfunded liabilities in a way we never have as well,” Newsom said. “We’re also making sound and significant one-time investments that will structurally maintain our surplus we hope for a number of years.”