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Newsom reveals ‘early action’ with Legislature – CalMatters
In short
Gov. Newsom and Democratic leaders in the Legislature announce an agreement on early action to reduce the state’s budget deficit by $17 billion. Votes are expected next week, ahead of action on the 2024-25 budget in May and June.
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Salary savings in open state government positions, cuts to a school facilities program and several climate initiatives, delays in public transit funding — these are some of the first steps California officials plan to take to address a looming multibillion-dollar budget shortfall.
Faced with an estimated deficit of between $38 billion and $73 billion next year, Governor Gavin Newsom and legislative leaders today announced a “early action” plan to address part of that gap before the regular budget process later this spring.
The $17.3 billion package includes some program cuts but relies mostly on new revenue, domestic borrowing and funding delays and changes to savings. It is expected to be voted on in the Legislature next week.
“I thank our legislative leaders for their partnership in taking this important step to address the deficit with a balanced approach that meets the needs of Californians and maintains a solid fiscal foundation for the state’s future,” said Newsom, who was calling for swift budgetary action since January, it said in a statement.
Newsom, President Pro Tem of the Senate Mike McGuire of Santa Rosa and President of the Assembly Roberto Rivas of Salinas, all Democrats, signaled two weeks ago that they planned to take such action but have continued to negotiate the details. Cuts to housing and homelessness programs that Assembly Democrats opposed were recently removed.
Among the main proposals are a nearly $4 billion expansion of a tax on health insurance plans that allows the state to draw on matching federal funds; deferring $1 billion for transit infrastructure and $550 million for preschool, transitional kindergarten and full-day child care; shifting $1.8 billion in revenue from the cap-and-trade system, intended to reduce greenhouse gas emissions, to fund other programs; and reducing funding for state departments by more than $760 million based on their vacant positions while deferring another $1.6 billion in employee salaries.
The strategy has faced criticism from Republicans, who have called it “artificial,” although they do not have the votes to block the plan, which requires only a simple majority.
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“This deal is a swing and a mistake by Democrats. California’s budget has major problems and Newsom is proposing JV solutions,” Assembly Republican Leader James Gallagher de Chico said in a statement. “With a $73 billion deficit, this deceptive deal is not the home run Gavin thinks it is.”
The initial action plan also includes language to freeze one-time funding from previous years and an agreement to use half of the state’s reserves in the next budget.
“We are all committed to delivering a balanced budget on time and this early action agreement is a critical first step toward reducing the state’s deficit,” McGuire said in a statement.
They are far from finished. Newsom will next introduce his revised budget proposal in May. That will kick off a month of deliberation with the Legislature, which must approve a balanced budget by June 15 or forgo its payment.
“We expect the governor to deliver challenging budget proposals next month to reduce the deficit over the long term, and we will consider them carefully,” Rivas said in a statement. “Together, we can deliver real solutions for hardworking Californians.”
For the record: This story has been updated to remove a reference to a cut to the CalWORKS program that is not part of the initial action plan.
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