Last week, Gov. Gavin Newsom announced his proposed revisions for the fiscal year 2019-20 budget, which begins July 1. The total budget recommendation is $209.1 billion.
His revised budget for use of general funds will spend $147 billion, $2.8 billion more than the January budget proposal.
The revenue projections for next year continue to be positive, enabling Newsom to increase expenditures as well as increase reserves for future economic bad times.
The Rainy Day Fund will be $16.5 billion, $3 billion greater than this FY that ends June 30, and $1.2 billion greater than the January request.
He also expects that the “wall of debt” will be completely paid for next year. According to his office’s press release, “This marks the first time in over a decade that all budgetary debts are completely paid off.”
Before augmenting programs or committing to multi-year spending, Newsom described how he is building budget resiliency. He has allocated funding to paying the unfunded liabilities, repaying debt and building reserves. This amounts to $15 billion.
Newsom also was proud of his budget priorities. The earned income tax credit was increased by $120 million. He is proposing to expand the credit to $1,000 from the $500 proposal in his January budget. The intent is to help low-income families with children.
Children and their future are also a major priority of the budget. “This is the highest investment in the K through 14 educational system,” Newsom said at the press conference. Slightly more than $81 billion is targeted for the state’s educational programs and activities.
This includes more funding for special education and more assistance for teacher loans to help mitigate the statewide teacher shortage. Special education will be allocated nearly $700 million next fiscal year.
The governor’s budget included $750 million in one-time, non-Proposition 98 general funds to assist schools in constructing or retrofitting facilities to expand access to full-day kindergarten programs. The May revision makes funding available over a three-year period, but with eligibility limited during the first two years to schools that will convert from part-day to full-day kindergarten programs.
To provide a greater fiscal incentive and support for districts to participate in the program, the May revision also increases the state share of the facility grant from 50 to 75 percent for schools converting from part-day to full-day kindergarten.
There also is funding to increase the subsidies for California families to purchase health insurance through Covered Cal.
The May revision also encourages accelerated housing development and more aid to help renters “fight back against rent gouging and other unfair practices.”
Funding for emergency responses and Cal Fire was not changed in the May revision. The governor’s request still includes a $500 million increase that is allocated to several state departments, including the Office of Emergency Services and Cal Fire.
These funds are intended to improve emergency communication and warning systems, purchase 13 new fire engines, add five new fire crews and increase the pace of wildfire preventions.
However, on Friday, at The Near Future Summit, Newsom and Dr. Peter Diamondis announced a competition to find innovative and novel ideas to detect and extinguish wildfires.
“We want to avail ourselves to the best and brightest minds around the world,” Newsom said. “We want the best way to put out fires. We haven’t pushed the boundaries of technology and innovation in fire suppression or extinction. We just haven’t.” Diamondis, founder of XPrize, added, “Can we find [the wildfire] and put it out before it grows? How [does] it get put out? Is it drones? Is it water cannons?”
During Thursday’s press conference, Newsom also continued his support to find ways to assure safe drinking water to all Californians. His January budget included the proposal for a tax on water production.
Although he did not specifically mention the tax during the press conference, he was adamant that the Legislature and the executive branch find a solution.
“That’s a proud day when the Legislature and the governor can align on providing a basic fundamental right, and that’s clean and drinkable water at an affordable price for the most vulnerable Californians,” the Governor said. “To walk away from that, to abandon that, I think is to walk away from our values. I am not wedded on how, but I am wedded on doing it, and we’re gonna get it done.”
A day before the May revision was released, Newsom and First Partner Jennifer Siebel Newsom announced some tax changes they have designated as the “Parents Agenda.” The Parents Agenda comprises “a sales tax and use exemption for diapers and menstrual products, increased child care and increasing the proposed state Earned Income Tax Credit for kids under the age of 6.”
