California Governor Proposes $213B State Spending Plan

Speaker 1: 00:00 Governor Gavin Newsome released his updated proposed budget for California. While there is a surplus today, he says he's focused on paying down debt and saving for future recession. Speaker 2: 00:11 We are preparing for a very different climate and we've never been more prepared as a state for entering into that climate. Speaker 1: 00:21 Kq edis politics and government desk reporter Katy or has been covering this and joins us to talk about what's in the proposed budget. Katie, welcome. Thank you for having me. So we got a glimpse of the governor's plan earlier this week when he released what he calls his parent's agenda for low income and middle class families. Did that theme continue with his release of his updated proposed budget? Yes it did. In fact, it was one of the first things he highlighted when a giving his presentation to the media. Um, he talked about expanding paid family leave by two weeks per parent, I should say that I had asked him about actually increasing the benefit that parents get as well because a lot of low income workers still aren't able to afford to take the leave that they're entitled to. He said that that is something they are working on. Speaker 1: 01:07 They have a task force that's going to be looking at all sorts of things surrounding family leave. Um, he also talked about exempting sales taxes on diapers and menstrual products, which is something that uh, lawmakers up here, including Lorena Gonzalez from San Diego has been pursuing for several years. The governor is a green to that, but only for two years. At this point. It's going to sunset after that. He says a, at that point they can reevaluate the fiscal circumstances of the state and see if it can continue. He's also proposing to allocate a $134 million for childcare and doubling a tax credit for parents with young kids from $500 to $1,000. And now walk us through some of the other highlights. Is this budget drastically different from the plan he initially unveiled in January? Uh, not drastically. There have been some tweaks and how money is distributed education, we'll be getting about $81 billion under prop 98 which spells out how schools need to be funded. Speaker 1: 02:09 Reserves are also increasing from 21 billion to 21.5 billion. And the governor is proposing to pay down some debt as well. And did governor Newsome say were additional revenue for spending would be coming from really it's income taxes and corporate taxes. They have increased since the January budget proposal. California's economy is really closely linked to the stock market because our property taxes don't fluctuate as much because of prop 13 so if the economy on the whole is doing well, the state tends to do well. He had initially proposed in his January budget to a $209 billion budget, but because those tax revenues have been stronger than projected, he's upping it to 213 point $5 billion. Though much of that is one time. Hmm. And he also included 1 billion to combat homelessness, which has double from his January proposal. Is the idea that some of that money would go to local governments and regional homeless agencies? Speaker 1: 03:10 Yeah. In fact, most of that money, about 650 million will go to local governments for emergency aid, uh, cities and counties. Those still have to submit regional plans for how they're going to deal with homelessness to get their share. But the governor is also expanding what that money can actually be used for. Um, including traditional and nontraditional permanent supportive housing programs, rapid rehousing programs, jobs, programs, Newsome really called homelessness, a stain on California that needs to be dealt with. And what about on housing more broadly? How does the budget address the state's housing crisis? It maintains the 1.7 $5 billion, um, to spur housing production that he had proposed in his January budget. But it refocuses some of that. Um, it refocuses about $500 million to actually make it easier to build affordable housing and to help renters. And it also redirect some money to infrastructure projects. So it's easier to build things that go along with the houses like roads and, um, you know, inputting water lines and things like that because cities and counties were saying like, we don't have the money to provide this infrastructure for these projects. So it is attempting to make that a little bit easier. Okay. And governor Newsom seemed to channel his predecessor, Governor Jerry Brown, when he warned of a looming recession. Let's take a listen. Speaker 2: 04:28 Governor Brown reminded folks when he was standing here two years back, uh, what I reminded you of in January, what we all need to remind folks of, uh, that we are modeling in the future prospects of a recession, recession that's more modest. Uh, then 2007, uh, but, uh, a little bit more intense than the 2001 recession. Speaker 1: 04:52 What else did he say about a recession and his plan to protect the state's finances against an economic downturn? You, as you heard there, he warned repeatedly that a recession or an economic slowdown could be on the horizon to prepare for that. He is proposing increasing reserves. He wants to deposit over a billion dollars into the state's rainy day fund, which would put it at more than $16 billion next year. And as we mentioned, he's also proposing to pay off some debt, about $35 billion. And again, he's using a lot of one time money for things so that the state won't have continuing expenses in the coming years. And how have fellow Democrats and Republicans been reacting to the governor's updated spending plan? You know, overall I'd say he's gotten a good reception. Even Republicans said that there was a lot to like in his budget plan, however, they do question the need for new taxes. Speaker 1: 05:45 There's been talk up here about possible taxes for things like drinking water, uh, and they say, yeah, we have all this money in reserves. Why can't we just tap into some of that? So that has been a criticism of his plan. So what's next in the state budget process? So the negotiations will continue and I should say largely with Democrats since they hold the majorities in both the assembly and the Senate. And the legislature must pass a budget by June 15th. I've been speaking with Katie or who is with Kq Edis politics and government desk. Katie, thanks for joining us. You're welcome.