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.