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California Governor Offers $144 Billion Budget, Ups Savings

January 10, 2019 2:31 p.m.

GUEST: Katie Orr, politics and government reporter, KQED

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Related Story: California Governor Offers $144B Budget, Sees Big Surplus


This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

I'm Alison St. John and I'm Jade Hindman.

Just moments ago California's new governor unveiled a 144 billion dollar budget proposal for the upcoming fiscal year.

The message we are advancing here is discipline building a strong foundation to which everything else can be built.

Gavin Newsom made his priorities clear when he was sworn into office earlier this week. He focused on early childhood education health care and education. Joining me now from Sacramento is katy or politics and government reporter with KQED. Katie welcome.

Thanks for having me.

I know you just finished with the conference moments ago but give us an overview of what Governor Newsom's first budget proposal looks like. What are some of the big ticket items in his spending plan.

Well he said it himself. This budget is primarily about education and that everything from kindergarten through higher ed and health and human services. About 53 percent of the budget is allocated to education another 28 percent is going towards health and human services. So this really is a social service budget. He's looking to make several big investments quickly to try and address some of the challenges that California's facing right now.

And Governor Newsom also talked quite a bit about housing. Here's what he had to say.

The poverty rate in California the reason it's the highest in the country is cost of living. The number one driver cost living is housing housing. This is the issue. And unless we get serious about it then this state will continue to lose its middle class and the dream will be limited to fewer and fewer people.

Now Katie how is he proposing this state address the housing crisis and homelessness.

Well there are several methods. He wants to see. He's talking about you know regional goals for building houses. And he implied that if cities don't meet their goals he might take away some of the gas tax revenue that they were allocated last year really trying to you know to to encourage them to get on it and you know kind of get around some of these the bureaucracy and things that slow down the process. He also talked about allocating 500 million dollars towards homelessness. Now he said that he's always been a housing first kind of person.

But he said the current crisis that we face is just so vast that we need quicker action so that 500 million dollars could go towards emergency shelters navigation cell centers and supportive housing centers as well. He also spoke about easing up. He was at California's famous environmental regulation. He says if we can we seek to build sports stadiums as happens quite often then we should be able to waive it for housing projects certain housing projects as well.

Now Newsome its predecessor Governor Jerry Brown was known for his fiscal restraint despite getting pushback from Democrats who wanted him to spend more of the state's reserves. Does Newsom's budget proposal sign or signal a big shift from Brown's approach to managing the state's finances.

Well actually Newsome me clear at the top of his presentation that the spending the new spending he's proposing over 86 percent is one time costs versus 13 being ongoing which is important because of course when you start an ongoing program you have to allocate money for that. Year after year which you know can be difficult when recessions hit. He also noted that he is putting about 14 billion dollars towards reserves and paying down debt. That includes putting about 5 billion dollars nearly five billion dollars towards paying down the state's unfunded retirement liabilities something we hear about a lot.

So he is taking strides to prove that he is financially if not conservative then preparing he said that they are projecting a slower growth rate than they have in the past they know a dip in the economy might be coming. But he also noted that they are projecting the states Reserve is going to go up to over 21 billion dollars which is over even what the Layo had projected in November. About six billion dollars more than projected. So he is confident that he's setting the stage. Well should there be a financial downturn.

And what kind of reaction have you heard so far on Governor Newsoms budget plan and budget proposal.

Well you know the Democrats who are in charge of the legislature just based on the statements they've already been giving them by email are very pleased with this Newsome said that he spoke with them at length before putting out this proposal so that they are you know on the thing page already. Republicans have been saying that this is way too much spending. We know the recession or I shouldn't say recession but at least the dip in the economy is likely on the horizon and that we should be even more conservative in our spending.

So right now pretty typical party split. It will be interesting to see how these programs exactly shake out once the legislature starts negotiating with the governor for a final budget.

And I imagine there will be lots of debate on his first spending proposal. What happens next in the budget process.

Right. So the legislature will begin looking over this. They'll begin having their budget hearing in May. The governor will based on like new revenue estimates will issue his May revision which is typically more up to date plan budget plan version of his budget plan and then the budget will be voted on in June.

All right. I've been speaking with Katie or politics and government reporter with KQED. Katie thanks so much for joining us.

You're welcome.