Newsom Lays Out Whopping $222 Billion Proposed Budget for California

(CN) – California Governor Gavin Newsom rolled out an ambitious $222 billion spending plan for 2020-21 that expands the state’s role in attacking a number of vexing issues, including wildfires, the housing shortage, and the ever-escalating homelessness crisis.

California Gov. Gavin Newsom gestures during an interview in Sacramento, Calif., on Oct. 8, 2019. (AP Photo/Rich Pedroncelli, File)

“I’m very proud to be a Californian. I’m proud of this state. And I’m proud of the budget that we are presenting today,” Newsom said, adding, “I am not naive about the areas where we’re falling short.”

He spoke to reporters for nearly three hours Friday, expounding on a dizzying array of priorities in a budget he termed “cautious,” but one that reflects $153 billion in new spending. It’s also the largest budget proposal in state history.

“The budget we are sending today is a balanced budget,” Newsom said while acknowledging the state’s obligation to pay down nearly $200 billion in unfunded pension liabilities. “We’ve got to get serious about those long-term obligations and we are getting serious about them.”

Newsom also touted the state’s health reserves, saying he expects the so-called “rainy day fund” to hit $19 billion by 2022. He noted California has three other reserve accounts to draw from, including one for the public school system.

The bulk of the state’s spending this year will go to health care and education. This year, Newsom’s budget package proposes an additional $3.8 billion for K-12 education and community colleges.

Newsom also pledged $900 million in grants for recruiting and training teachers in low-income school districts, an effort he said will provide economic incentives to get qualified teachers into in high-poverty classrooms to help erase the achievement gap.

“We are addressing the teacher issue in a way we haven’t done in the past,” he said.

He also signaled a move toward universal preschool and “affordable” child care, devoting $5 million toward that goal, as well as expanding paid family leave from six to eight weeks. “We will get all income-eligible four-year-olds universal preschool in the state of California,” he said.

Newsom’s budget also calls for an $80.5 million MediCal expansion for seniors over 65 regardless of immigration status.

Even more ambitious plans were leaked earlier this week ahead of the budget’s official release, notably an effort to lower prescription drug prices by creating the state’s own generic drug label.

The budget package also includes $1 billion for housing subsidies and health care for the homeless, and $1.4 billion by 2022 to expand MediCal to provide homeless people with more preventative care and mental health services.

By executive order on Tuesday, Newsom established California Access to Housing and Services Fund in the state’s social services department to pay rent for homeless people and find them stable housing. It also ordered the Department of General Services to supply 100 camp trailers as a means of temporary housing. Newsom said those should be ready by March.

In his address to reporters Friday, Newsom made clear that he plans to adopt a hands-on role in dealing with California’s homeless problem.

“I’m the homeless czar in the State of California,” Newsom said, adding the state would appreciate more help from the federal government but will be “moving ahead aggressively” regardless. “We put out an executive order and we’re going to start hitting on all cylinders.”

Addressing the state’s related housing shortage, Newsom’s budget promises $17 billion over the next five years to produce affordable housing.

“The budget is not the solution to housing, but the budget can help. The good news for those of you who feel the status quo is untenable – you’re right and the money will start flowing,” Newsom said, noting the first payments to cities and counties from last year’s $1 billion housing allocation are being paid out this month. “There’s an unprecedented amount of money going out,” he said.

Newsom also said the state will continue to hold cities and counties accountable for removing impediments to building more housing to meet local needs.  “It’s the most vexing struggle we have. A big part of our efforts this year is to address that gap,” he said.

Newsom’s budget also tackled environmental issues, proposing a $4 billion “climate resilience bond” for the November ballot to fund five years of investments to mitigate wildfire risks, rising sea levels, and drought. He proposed $500 million for hardening in fire-prone areas and $250 million for reforestation and other forest-health projects. His budget also commits to providing low-interest loans to small businesses looking to fund carbon-reducing and green-oriented ventures through a four-year plan called the Climate Catalyst Revolving Loan Fund.

Other notable budget items include: $523.8 million from the general fund for a minimum wage increase to $13 per hour that took effect Jan. 1 and a hike to $14 planned for Jan. 1, 2021; a $2 per 40 milligrams of nicotine tax on vaping to pay for youth health care and prevention; exemption for small businesses from the $800 minimum tax paid by limited liability companies; and $11.5 million to expand a pilot program in the courts to reduce fines and fees for traffic infractions.

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