Gov. Newsom Proposed Budget

Governor Newsom Proposes New Fiscal Year Budget

Governor Newsom unveiled his Proposed Budget on January 8th, outlining his budgetary and policy priorities for the coming fiscal year. Following upon a tumultuous economic year with a $54 billion deficit, this year’s budget paints a rosier picture with a proposed $227 billion “balanced” spending plan, $22 billion in budget reserves and a one-time $15 billion budget surplus. This does not, however, reflect the $7.6 billion structural deficit projected for 2022-2033—one that will grow to $11 billion in 2024-2025. Below is a brief synopsis of proposed expenditures and policy changes offered in the Governor’s budget:
  • $ 6.7 million one-time General Fund ($3.35 million in the current year and $3.35 million in July 2021) with the University of California Cooperative Extension to provide technical assistance and grants to small, mid-sized and underserved farmers; this assistance may include business planning, compliance, and accessing state and federal funds
  • $8.7 million in federal funds and 24 positions at the Department of Food and Agriculture to implement the Food Safety Modernization Act
  • Climate smart agriculture funding (see the Climate Change section below)
  • $40 million General Fund for the State Water Efficiency and Enhancement Program (see the Water section below)
  • $6 million General Fund ($4 million for current year and $2 million in July 2021) to do an assessment of EPA/CDFA regulations and identify opportunities to streamline regulations, reporting, and develop a unified licensing portal for program regulation and payment
  • Proposed extension of the Carl Moyer Memorial Air Quality Standards Attainment Program (Carl Moyer Program) which provides grant funding for cleaner-than-required engines, equipment, and other sources of air pollution with the State Air Board and local air districts until 2024
  • Allow the Department of Industrial Relations to increase budget by $14.4 million and position allocations by 70 to hire additional Cal/OSHA inspectors
  • Provides $8.6 million and 43 positions to allow access to workers comp benefits under SB 1159 and investigate workplaces that violate COVID-19 specific guidelines and regulate businesses for adequate personal protective equipment stockpiles for future crises
  • Establish a new Department of Better Jobs and Higher Wages compromised of several existing Labor Workforce Development Act agencies involved in job training, labor market information, and apprenticeship programs
  • Replacing the current pesticide mill assessment structure (which is non-discriminatory on pesticide type), with a risk-based assessment strategy that charges a higher mill for higher risks (i.e. those pesticides with no classification or a ‘caution’ classification would go from 21to 26 mills, ‘warning’ would go to 40 mills and ‘danger’ would go to 45 mills)
  • $54 million in Cap and Trade expenditures ($30 million in current year and $24 million in July 2021) for the Safe and Affordable Drinking Water fund
  • $60 million in one-time General Fund ($30 million in current year and $30 million in July 2021) to DWR for implementation of the Sustainable Groundwater Management Act (SGMA) to support economic mitigation planning and implementation projects

Governor Brown signs 2014-2015 State Budget

Governor Edmund G. Brown Jr. signed a balanced, on-time state budget that pays down debt, shores up the teachers’ retirement system, builds a solid Rainy Day Fund and directs additional funding for local schools and health care.

“This on-time budget provides for today and saves for the future,” said Governor Brown. “We’re paying off the state’s credit card, saving for the next rainy day and fixing the broken teachers’ retirement system.”

The budget includes a plan of shared responsibility among the state, school districts and teachers to shore up the State Teachers’ Retirement System (STRS). The first year’s contributions from all three entities total approximately $276 million, growing in subsequent years to more than $5 billion annually. This is projected to eliminate the unfunded liability in the system by 2046.

The budget also directs $1.6 billion into the state Rainy Day Fund – the first deposit into the fund since 2007. The fund is expected to grow to $4.6 billion by 2017-18, if voters approve of the measure on the November ballot that was proposed by the Governor and passed by the Legislature.

When Governor Brown took office, the state faced a massive $26.6 billion budget deficit and estimated annual shortfalls of roughly $20 billion. These deficits, built up over a decade, have now been eliminated by a combination of budget cuts, temporary taxes approved by voters and the recovering economy.

Significant details of the 2014-15 Budget:

Paying Down Debts and Liabilities
The budget reduces the Wall of Debt by more than $10 billion by paying down $5 billion in deferred payments to schools, paying off the Economic Recovery Bonds one year ahead of schedule, repaying various special fund loans and reimbursing $100 million in mandate claims that have been owed to local governments since at least 2004. Under the budget plan, the Wall of Debt would be completely eliminated by 2017-18.

Investing in Education and Health Care
The budget continues the state’s reinvestment in local schools, providing more than $10 billion this year alone in new Proposition 98 funding. This includes $4.7 billion for the second year of implementation for the Local Control Funding Formula, which directs new education revenues to districts serving English language learners, students from low-income families and foster youth. The budget also expands the number of low-income preschool students served, increases the rates paid to preschool providers and provides grants to improve the quality of these programs.

In health care, last year the state adopted the optional expansion of Medi-Cal under the Affordable Care Act, providing millions of Californians with affordable health coverage. Enrollment is now expected to rise from 7.9 million in 2012-13 to 11.5 million in 2014-15, for a total cost increase of $2.4 billion.

Addressing Climate Change
The budget includes $872 million of Cap-and-Trade auction proceeds – authorized by AB 32 – for greenhouse gas reduction, with an emphasis on assisting disadvantaged communities. The plan will modernize the state’s rail system, including high-speed rail and public transit, and encourage local communities to develop in a sustainable manner.

It will also increase energy, water and agricultural efficiency, restore forests in both urban and rural settings and create incentives for improved recycling. The budget permanently allocates 60 percent of future auction proceeds to sustainable communities, public transit and high-speed rail. The remaining proceeds will be allocated in future budgets.

Additional details on the 2014-15 budget, including line-item vetoes, can be found at www.ebudget.ca.gov.