California’s surplus is expected to reach an unprecedented $97 billion under Newsom’s new plan

California’s government surplus is expected to surge to $97.5 billion by next summer, according to a budget plan announced by Governor Gavin Newsom on Friday. chaos in the near future.

“There has never been a state in American history that has experienced such a surplus,” Governor Newsom said at a news conference in Sacramento.

The new budget blueprint estimates total spending for the fiscal year starting in July at $300.6 billion, a $14 billion increase over what Newsom had proposed to lawmakers four months ago. The Governor’s plan will give lawmakers billions of dollars to invest in a variety of new items, including inflation relief packages for Californians, additional funds to tackle dangerous drought and wildfire conditions, subsidies for low- and middle-income health care initiatives, and top-per-student schools. demand that The level of funding in the state’s history.

Government spending of the scale Newsom envisions will be driven in large part by the incredible investment income of California’s wealthiest taxpayers.

The governor’s new budget, an amendment to the plan proposed by the governor in January, points to the enormous role that taxes paid on capital gains play in the state’s finances. That dollar accounts for a higher percentage of personal income tax collected than at any point since 1999. Newsom’s budget points out that this part came just before the collapse of the state’s dot-com industry. the ten years that followed.

“People who care about it are right to worry about it. We have that in mind,” Newsom said, saying what he was arguing was a prudent plan focused on short-term spending proposals.

The most notable change compared to Newsom’s January plan reflects new concerns about the impact of rising inflation. The Governor’s budget has allocated $18.1 billion to short-term relief, of which more than 60% will be distributed through a $400 cash payment to Californians who own vehicles.

However, the effort has received little support from the legislature since it was first announced by Newsom in March. Democrats are urging instead to adopt a plan that distributes relief funds based on adjusted gross income rather than car ownership. Resolving disagreements over who gets paid will be a key part of closed-door negotiations between Newsom and the legislature in the coming weeks.

The Governor’s inflation relief plan also includes funds to help struggling tenants who have applied for the state’s rental assistance program by March 31. Some low-income residents are also eligible for assistance in paying their utility bills and using free public transit under Newsom’s budget plan. .

Californians who work in hospitals and skilled nursing facilities can receive cash benefits of up to $1,500 per person under the budget’s inflation relief package, and up to $2,000 per worker if their employer provides matching funding.

Newsom’s budget outline doesn’t explicitly suggest a sharp reversal of the fortune over the next few years, despite financial warning signs being visible for months. In the spring, the Office of Independent Legislative Analysts reported: 95% of the time the simulation results of 10,000 possible state income scenarios were insufficient..

Analysts say there is no bigger problem than the confusing results of how new tax revenues should be handled under the spending limits set out in the California Constitution, a 1979 voter-approved amendment that triggers compulsory education spending and tax refunds when cash receipts break regulations. said. predetermined hat. Newsom’s new budget does not anticipate such problems in the near future and proposes spending on areas not covered by the cap.

Legislators who successfully addressed spending caps with a short-term solution last year came up with a one-time solution for this year. However, there is growing consensus in the state capitol that the 1979 measure should be formally amended through a ballot measure sent to voters in 2024.

Government spending blueprints also reflect changes in the political environment. Newsom is asking lawmakers to allocate $125 million to expand access to abortion services. The effort began in earnest almost two weeks ago after the U.S. Supreme Court’s draft opinion to overturn Roe v. Wade was leaked without permission. The amended budget requires $40 million in taxpayer funds to subsidize abortion-related resources for low-income women, including women who can travel to California from other states.

Not all spending decisions envisioned in Newsom’s budget are fully embodied.

The revised blueprint contains little detail on the cost of fully implementing the Governor’s sweeping proposal to provide court-ordered treatment to homeless people with serious mental illness and behavioral health needs. The so-called Community Support, Recovery, and Empowerment Court will create a new civil justice treatment program for approximately 7,000 to 12,000 Californians who experience a mental illness such as schizophrenia and need treatment and shelter for stability.

For up to two years, CARE plans help connect participants to drugs and a variety of mental health services, along with housing plans, public defenders and private advocates.

Newsom has proposed new funding of $39.5 million to the State Department of Aging and Judiciary to conduct CARE Court hearings and provide other related services. However, there is no clear understanding of what the state must pay for the services the county government will provide.

Since January, lawmakers have held dozens of public hearings to review the governor’s original budget plan and consider amendments. Last month, state Senate Democrats proposed broad funding increases for social services through discussions about easing inflation and rising gasoline prices, recording cash reserves for general government and schools and so-called safety net programs.

Lawmakers have passed the budget in a timely manner over the past decade, but in recent years this process has far exceeded the constitutional deadline of June 15. In these cases, governors and Democratic leaders have quickly settled on a broader framework to ensure that official end dates are met and that legislative salaries are not forfeited.

But officials haggle for days or weeks over the details, ultimately drawing up the details of an additional budget bill approved by the Legislature through a vote held in early summer.

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