After less than one week in office, Gov. Gavin Newsom announced his proposed budget for fiscal year 2019-20, which begins July 1. The total budget recommendation is $209.1 billion.
Newsom’s budget proposal, benefiting from unexpectedly large revenue, addresses many issues, which he raised during the campaign and continues Gov. Jerry Brown’s concern about preserving the state reserves in case of an economic downturn. He also is earmarking several billion to pay down state debt.
Nearly 85 percent of the new funding is for one-time efforts, which can be discontinued if the state revenues drop next year. Also, Newsom is proposing to pay more of the state costs for the California Public Employees’ Retirement System and the California State Teachers Retirement System for unfunded pension liabilities, which will both save about $7 billion over then next 30 years.
State Sen. Jeff Stone had this to say about Newsom’s proposal, “Governor Newsom certainly came out with an ambitious budget full of outside-the-box thinking. I appreciate his commitment to ensuring we have an adequate Rainy Day Fund and am encouraged that the governor seems to recognize that California may face a recession in the coming years.”
Healthcare, housing, education and early childhood programs are the major areas where Newsom wants to invest more funds.
One of his major initiatives is establishing a working families tax credit. This will provide another $500 tax credit for low-income families with young children who already qualify for the state’s Earned Income Tax Credit. This credit he proposes to expand to full-time workers earning $15 per hour.
The budget also includes funds to increase subsidies to low- and middle-income residents for healthcare coverage. Also, Medi-Cal will be available to young adults between ages 19 and 25, regardless of immigration status.
Part of the healthcare package will include an individual mandate, similar to the federal individual mandate, which originally was a part of the Affordable Care Act.
The proposal includes $1.3 billion for grants to spur housing development and new tax credits for low- and moderate-income housing construction.
The budget addresses child poverty in two programs. There will be more funds available for low-income families served by CalWORKs. Secondly, Newsom proposes a $6,000 grant for students attending California public colleges and who also are parents.
Funds for school districts grow. A one-time program to encourage full-day kindergarten programs is part of the education portion. To help districts with their payments for teacher retirements, the budget includes $3 billion to augment district payments to CalSTRS. And he proposes that the second year of community college education should be tuition free.
Wildfires and emergencies are another important area in Newsom’s budget proposal. The Cal Fire budget will have another $415 million, much of which is for fuels reduction and wildfire prevention. But there is added money for Cal Fire’s air attack resources, including 13 new fire engines, new helicopters, retrofitting C-130s and communication equipment.
Cal Fire will have nearly $10 million for staff to use remote sensing technology for advance fire warnings, as well as monitoring fire behavior.
As a consequence of the weaknesses in the emergency notification systems for the Northern California fires this year, Newson wants to revamp the state system. This may include a 911 tax on phone service.
There are funds to replace property taxes for counties, such as Riverside, where the major conflagrations occurred this summer.
A ghost of budget pasts accompanies Newsom’s proposal. To help disadvantaged communities eliminate contaminated water and afford the capital investments, Newsom plans to revive the proposed tax on water.
In response to this piece of the budget proposal, Cindy Tuck, deputy executive director for government relations for the Association of California Water Agencies, said in a press release, “The vast majority of the state’s residents have access to safe drinking water, but a small percentage of the population does not. This unacceptable reality is a social issue for the state of California. ACWA believes that making access to safe drinking water for all Californians should be a top priority for the state. However, a statewide water tax is highly problematic and is not necessary when alternative funding solutions exist and the state has a huge budget surplus.”
In his transmittal message, Newsom described his budget proposal as “California for all. That is the driving idea behind this budget proposal and my first year in office.”

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