Gov. Gavin Newsom released his proposed fiscal year (FY) 2022-23 budget last week. Total expenditures will be nearly $213 billion with project revenues of $195.7 billion. The estimated $23.7 billion surplus from FY 2021-22 plus new revenues is expected to result in a year-end balance of $6.2 billion.
Also, the state’s “Rainy Day Fund” will be $20.8 billion, which is approaching its maximum, equal to 10% of the General Fund revenues. And, another $12 billion is available in the Public School System Stabilization, Safety Net and Operational reserves.
The governor described his proposed budget as a “Blueprint” to “… directly confront the state’s largest threats …” His five major threats or priorities are “COVID-19, the climate crisis — including worsening wildfires and drought — persistent inequality
and homelessness, and keeping our streets safe.”
The budget includes $2.7 billion for COVID vaccines, boosters and greater testing.
Erica Costa, California advocacy director for the American Lung Association, expressed support for this initiative, “Today, Governor Newsom proposed the California State Budget for fiscal year 2022-2023 with major proposals targeting COVID-19 and climate change. We are pleased that the Governor has identified defeating COVID-19 as the top priority for the state in this year’s budget.
“… An additional $2.7 billion will be invested into further testing and expanded vaccination efforts,” Costa added. “We look forward to seeing continued investment in defeating the pandemic and placing public health as the top priority for the state.”
Also in strong support of this proposal was California Hospital Association President and CEO Carmela Coyle, who said in a press release, “As the current Omicron surge demonstrates, no one knows for how long the COVID-19 pandemic will endure or the enormity of its impact on California for years to come. What we do know is that the demands on our state’s health care system have never been greater, and we need all the support we can get. The Governor’s request for this funding, including resources to shore up a depleted workforce, represents a vital step toward making sure the health care needs of every Californian are met as a crisis with no known end date continues to claim lives every day.”
In a first in the U.S., Newsom proposes universal health care for state residents regardless of their immigration status through expansion of access to Medi-Cal, the state’s health care program for low-income Californians.
“California is tackling the cost of health care head on. Under the California Blueprint, our state will be the first to achieve universal access to health care coverage,” said Newsom. “Doubling down on our actions to reduce costs for middle-class families and expand access to important services, this proposal is a transformative step towards strengthening the health care system for all Californians. Everyone is healthier when everyone has access to quality, affordable care.”
The intent of these health initiatives continues the efforts to keep schools open. Education and schools were an important priority.
The greatest share of state funding continues to be for education. The General Fund provides $70 billion and including other sources, the total state funding for education at the K to 12 grades is $119 billion, which is $20,800 per pupil from all sources.
Universal free prekindergarten is another part of this effort. The budget proposes $1.5 billion to replace diesel school buses with electric vehicles.
Funding for climate change issues includes more for fighting fires, including equipment such as helicopters and dozers. Another $1.2 billion is being added to the $1.5 billion this year to improve the condition of the state’s forest environment. The continuing presence of a statewide drought is also a climate issue. The governor has proposed $750 million to address the problems of lack of adequate potable water.
Homelessness is another critical priority. The governor is proposing more funding for mental health initiatives as well as another 55,000 housing units to help people get off the streets.
Wednesday, Jan. 12, two days after his budget announcement, Newsom was in San Diego to highlight the homeless crisis. In his press release, he stressed, “This past year, California has been able to move 58,000 individuals off our streets and into the housing and treatment they desperately needed. The California Blueprint will double down on those efforts, focusing on clearing encampments, while also setting the groundwork for long-term systemic change with significant investments in mental health and substance abuse treatment to get vulnerable people off the streets.”
The fifth threat Newsom wants the Legislature to address is public safety. His plan includes funds for assisting local law enforcement, including a new Smash and Grab Enforcement Unit intended to stop organized retail crime, more prosecutors and funds for more gun buybacks.
Besides funding increases, Newsom also said he will not impose July’s annual increase in the gas tax. So at least for one year, California drivers will have a partial “holiday” in tax increases. This should save slightly more than $500 million.
On Friday, the Legislative Analyst’s Office (LAO) issued its initial review of the budget package. LAO reported no significant criticisms of the governor’s proposed budget.
However, LAO did express some concern that next year’s expenditures may be higher than expected revenues. Therefore, it cautioned the Legislature to allocate more funding for reserve accounts.
Revenue projections did assume the fading of the COVID-19 disruptions. But these were made before the surge associated with the Omicron variant. As a result, LAO recommended more attention be given to the possibility of greater program flexibilities and temporary support measures, similar to those used in 2020 during the beginning of the COVID disruptions.