Newsom Signs Largest State Budget in History

(CN) – Hours before the midnight deadline, California Gov. Gavin Newsom signed the state’s operating budget of $214.8 billion on Thursday evening, a plan that increases spending on public education, expands health care, and addresses the state’s homelessness crisis.

Almost half of the state budget, the largest in history, will be spent on funding education. It allocates $103.4 billion for school districts who have been plagued with budget cutbacks since the 2008 recession, as well as $687 million to pay education debts. Additionally, lawmakers will no longer be able to lower the state’s mandatory level of spending on education.

“The driving idea behind this budget – and my first year in office – is to combat the cost crisis and maintain fiscal discipline,” Newsom said. “This is a responsible budget that saves for challenging times ahead while investing in the present-day needs of working Californians.”

Full-day kindergarten classes will be expanded as the budget gives schools $300 million to do so, while $377 million will be placed in a cash reserve fund for future school funding.

In addition to record spending on K-12 education, the new budget also waives up to two years of fees of community colleges. Enrollment at University of California campuses will be expanded and funding will be provided for 41,000 Cal Grant awards.

The budget splits $650 million among cities, counties and regional homelessness agencies to construct homeless shelters and provide services. The state’s largest cities will receive $275 million, while regional agencies will receive $190 million and $175 million to counties.

The budget also creates a fast-track approval process for new shelters that will skip full environmental reviews. Additionally, the new rules penalize cities and counties that fail to build new housing developments, giving judges the ability to fine them up to $600,000 a month.

If the fines go unpaid, the state controller’s office can “intercept” funds that would normally go to that county or city. The new rules have received pushback from some counties and cities though.

California Gov. Gavin Newsom discusses his first-year budget on Jan. 10, 2019. (Nick Cahill/CNS)

“We find the new penalties on local governments already struggling to add housing and address homelessness concerning,” the California State Association of Counties said in a published statement on Thursday. “Nonetheless, California’s 58 counties stand ready and committed to meet this challenge.”

In a joint statement between the governor, Senate President pro Tem Toni Atkins and Assembly Speaker Anthony Rendon said the budget will help address California’s overwhelming homelessness crisis.

“Importantly, we have come to agreement on a package of housing measures, one that creates strong incentives — both sticks and carrots — to help spur housing production across this state, all while providing significant levels of funding to fight homelessness,” the statement said.

The budget also sets aside $143.3 million to add more than 12,000 slots to daycare centers in the state, mostly reserved for low-income families. The expansion will be paid for by taxes from legalized marijuana.

Though the federal mandate under the Affordable Care Act was abandoned, Californians will have to obtain “minimal essential” health coverage by Jan. 1 or pay a fine between $695 and $3,252, depending on income.

New insurance subsidies will be offered for purchase through the Covered California exchange. The state is set to spend around $36 billion on Medi-Cal, the health care system for those unable to pay for medical insurance.

Lawmakers also agreed to pay an additional $9 billion into the California State Teachers’ Retirement System and California Public Employees’ Retirement System in an effort to meet steadily rising pension obligations. The budget will place a total of $19.2 billion in reserves, with $16.5 billion in the Rainy Day Fund.

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