California state budget breaks record, tops $220 billion
California Gov. Gavin Newsom unveiled a $222.2 billion budget proposal Friday with plans to spend part of a projected $5.6 billion surplus on green technology and homeless aid.
In a press conference that lasted two hours and 50 minutes, Newsom touted the strength of California’s fiscal outlook after 10 years of consistent economic growth while he made a case to invest in programs that could lift up lower- and middle-income families.
“Our state has provided the rocket fuel for the nation’s economic expansion,” his budget proposal reads. “We are the world’s capital of innovation. We have more people with access to health care and higher education than any other state. California is showing the nation and the world what big-hearted, effective governance looks like.”
Newsom’s plan would steer more money to Medi-Cal, the state’s health care program for low-income people. Part of that expansion would boost assistance for homeless people and mental health care.
The budget proposal also contains ambitious health policy proposals, including creating a state-owned generic drug label and a single drug purchasing market in California.
To combat climate change, Newsom wants to allocate $250 million per year for four years to provide loans for small businesses to buy green technology.
The budget proposal would also direct $750 million from the anticipated surplus to organizations that help homeless Californians. That money could be used to pay rent, build housing and improve shelters, according to Newsom’s office.
He also want to continue putting money into state budget reserves. His plan calls for the state to have more than $21 billion in accounts that it could access in a recession to fund social services, schools and other government programs.
His budget included a number of other detailed proposals, such as expanding access to preschool, hiring hundreds more Cal Fire firefighters, providing money to retrofit homes in wildfire zones, and ending euthanasia at California animal shelters.
At one point, he seemed to acknowledge the ambition of his plan. “I want to do everything, can’t do everything overnight.”
Newsom’s estimate for the state’s surplus is smaller than the $7 billion surplus projected by the Legislative Analyst’s Office projects.
Both offices predict that California’s economy will continue to grow, but more slowly than in the current budget year.
The much larger $21.5 billion surplus predicted for this fiscal year allowed Newsom and lawmakers to boost spending on schools, homelessness and undocumented immigrant health care.
The current $214.8 billion state budget also adds billions to the state’s reserve funds. The 2007-08 budget at the cusp of the Great Recession was $145.5 billion.
Newsom aimed to temper expectations in the months leading up to his announcement, suggesting next year’s budget won’t be as flush with cash. California is in a remarkably long economic expansion, which began in June 2009, but Newsom warned the economy is slowing and a recession is on the horizon.
Newsom’s announcement kicks off months of negotiations between his office and the Legislature. He’ll release a revised proposal in May.
Newsom and lawmakers have until June 15 to pass a budget in time for the start of the upcoming fiscal year July 1.
This story was originally published January 10, 2020 at 10:31 AM with the headline "California state budget breaks record, tops $220 billion."