California governor to update budget plan with billions in new funding


SACRAMENTO, Calif. — California enters the next fiscal year with a record surplus of nearly $100 billion, Gov. Gavin Newsom said Friday.

Newsom unveiled a revised budget plan of just over $300 billion for the next fiscal year, the highest in state history and fueled by increased tax revenue. The state collected $55 billion more in taxes than expected in January, leaving it with an estimated surplus of $97.5 billion.

Newsom said one of his top budget priorities is to ease inflation for Californians.

“People are feeling deep stress, deep anxiety,” he said.

“Our revenues are up significantly from January,” said Keely Martin Bosler, director of the California Department of Finance.

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Newsom has already said how he wants to spend most of the state money this year. In January, the governor revealed a proposed $286.4 billion budget that would pay for the health care expenses of all low-income immigrants living illegally in the country while cutting taxes by about $5.5 billion. for businesses – reductions that Newsom has since signed.

But that budget proposal was based on the administration’s best estimate of how much money California would have. Now that most people have paid their taxes, state officials know they will have a lot more money than they thought. On Friday, Newsom will update his budget proposal to include this new money.

The governor has already announced how he plans to spend some of the new funds. He wants to spend an additional $322 million on drought and an additional $125 million on facilitate abortion for women in California.

But there are still many questions about how the state will spend its surplus. On the one hand, Newsom and legislative leaders can’t agree on how to give money back to taxpayers to help offset rising gas prices.

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He offered to give $400 checks to registered car owners in the state, with up to two checks per person. It would cost the state about $11.5 billion, he said. Although the money only goes to car owners, Newsom said it should be seen as “reimbursement and relief from inflation”.

“For you, it could be a refund to solve the grocery problem, it could be a refund to solve the other financial burdens that are placed on you,” he said.

Democrats in the state legislature want to give $200 checks to anyone earning below a certain income level. The two parties are still negotiating.

Newsom wants to expand the state’s Medicaid program to cover health care expenses for all low-income adults, regardless of immigration status. But Newsom’s plan wouldn’t begin until January 2024. Some Democratic lawyers and lawmakers have urged him to do so sooner.

To look closer

Some of the other big numbers Newsom mentioned today:

  • $128.3 billion in education spending, from transitional kindergarten to high school, a record sum that equates to $22,850 per student.
  • Another $23 billion will be deposited into the state’s rainy day fund, to be drawn the next time the economy slows
  • $2.5 billion for housing, including $500 million to fund the conversion of vacant malls and storefronts into homes
  • $3.4 billion more to pay off state employees’ pension debt

At least one of Newsom’s budget proposals in January will not happen. With gasoline prices soaring, the governor had wanted to halt an inflationary increase in the state’s gasoline tax this summer. But the Democrats who control the state legislature have not agreed to do so, and now it is too late.

Republicans urged Newsom to suspend all state gasoline taxes for a year. They also asked him to increase a tax credit for renters and offer new tax credits for students.

“Senate Republicans believe there is a better way to invest in the state,” said Senator Rosilicie Ochoa Bogh, a Republican from Yucaipa.

But Republicans have only nine of the state’s 40 Senate seats, preventing them from mustering enough votes to get their priorities across.

See the California budget


$18.1 billion in inflation relief in direct payments to fight inflation, help people pay utility bills and rent, and reduce costs such as health care and child care.

► $47.1 billion climate commitment – an increase of $32 billion this year – to fight pollution, build climate-resilient water supplies, reduce the risk of catastrophic wildfires, ensure grid reliability and accelerate clean energy solutions, and protect communities from extreme heat.

► $660 million for ensure public safety with funding for new officers and mental health support for law enforcement, support for victims of sex trafficking, cracking down on internet crimes against children, and tackling the opioid crisis.

► $14.7 million to address homelessness and the mental health crisis with investments to help people get off our streets and access the services and care they need, focusing particularly on Californians who suffer from mental health and addiction disorders.

► $37 billion to rebuild California with money for infrastructure, including broadband and new housing, plus a historic $128.3 billion investment to transform public education.

CalMatters contributed to this report.


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