Newsom and Democratic lawmakers describe California’s first cuts totaling $17 billion

From left to right: Governor. Gavin Newsom in Sacramento on January 10, 2024; Senator Mike McGuire in Healdsburg on January 26, 2024; and Assembly Speaker Robert Rivas in Sacramento on June 30, 2023.
(Associated Press; For The Times)

Newsom and Democratic lawmakers describe California’s first cuts totaling $17 billion

California Politics

Taryn Luna

April 4, 2024

California Governor Gavin Newsom and the leaders of the state Senate and Assembly announced Thursday an agreement to cut $17 billion from the state budget in April. In doing so, they provided the first details of their plan to address the state’s massive deficit.

The plan calls for deferring $1 billion in funding for intercity rail projects, saving $762.5 million by reducing funding for vacant state jobs and withdrawing $500 million from a program to help districts pay for construction projects for primary and secondary education, among other proposals to reduce the deficit. .

“We are able to meet this challenge because of our responsible budget management over the past several years, including record budget reserves of nearly $38 billion,” Newsom said in a statement. “There is still work to be done as we finalize the budget and I look forward to the collective work to continue building the California of the future.

The deal marks a repeat of a clumsy budget announcement made last month when Newsom and legislative leaders announced a premature agreement without disclosing the exact amount of funding they planned to cut, or providing details on any single program it would affect. would be affected.

Lawmakers and the governor are scrambling to reduce California’s budget deficit, which Newsom estimated at $37.9 billion in January, before the budget forecast is updated in the coming weeks, likely leaving California in an even deeper budget hole. Estimates from the Legislative Analyst’s Office suggest the deficit next year could be twice as high as Newsom’s forecast.

Lower-than-expected revenues, delayed tax deadlines and overspending based on inaccurate budget forecasts created California’s grim financial picture. The state budget relies heavily on capital gains taxes paid by California’s highest earners, creating state revenue


for stock market volatility.

Republicans have criticized the lack of transparency in state budget negotiations, claiming Democrats created the budget crisis by continuing to fund expensive programs such as expanding Medi-Cal to all low-income immigrants even as state revenues valleys.

Assembly Republican Leader James Gallagher (R-Yuba City) called the budget deal “a U-turn and a miss by Democrats.”

“California’s budget has major league problems and Newsom is proposing joint venture solutions,” said Gallagher.

The first round of cuts can be voted on next Thursday.

We are all committed to delivering a balanced budget in a timely manner, and this early action agreement is a critical first step to reducing the states’ deficit,” said Senate President pro tempore Mike McGuire (D-Healdsburg).

Because the deficit is so large this year, Newsom has urged the Legislature to take early action to eliminate the deficit now, well before the June 15 deadline to pass a budget.

The cuts Democrats agreed to this month are largely seen as the easier choices, allowing them to focus on tougher deliberations later this spring. Reducing the deficit before Newsom unveils his revised budget proposal in May could also reduce public perception of the state’s budget problems by reducing the deficit before it is expected to grow.

The struggle to reach consensus so far foreshadows the difficult work ahead in May and June for a Legislature and a governor with little experience navigating a budget crisis while making challenging choices that will impact have for millions of Californians.

The deal announced Thursday largely reflects a plan the Senate put forward weeks ago to “reduce the deficit” by $17 billion, which aligns with many of Newsom’s proposals to offset the shortfall.

The Assembly, where Democrats hold 62 of the 80 seats under a new chairman, took a little longer to reach a consensus and

This week saw pushback on some proposed cuts to housing and homelessness programs

stresses its desire to suspend one-off expenditure from previous budget years that had not yet been distributed, as agreed by the other parties.

Assembly Speaker Robert Rivas (D-Hollister) said his own

rooming houses

approach was the right way to close such a massive deficit, and he expects Newsom to submit challenging budget proposals next month to reduce the deficit over the long term.

The agreement, according to Newsom and legislative leaders, includes:

A $762.5 million savings from refusing to fill vacant state positions. The School Facility Aid Program, which funds construction projects for primary and secondary education, will be cut by $500 million. Deferral of $1 billion in funding for the state’s Formula Transit and Intercity Rail Capital Program. Delaying $550 million for a facility construction grant program to expand preschool, TK and full-day kindergarten. Paying state workers on July 1 instead of June 30 to push $1.6 billion in payments into subsequent budget years.

The full list is available here. More details about the plan will be revealed when lawmakers introduce bills, possibly next week.


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