California Gov. Gavin Newsom on Friday released a $300.6 billion spending plan that would fund tax rebates, abortion care, bonuses for health care workers and more, fueled by a $97.5 billion surplus.
The flush budget largely reflects a continued surge in tax revenue driven by income gains in high-earning households.
The “simply without precedent” surplus is the latest windfall for state coffers, which swelled by tens of billions of dollars in a short two-year period.
“No other state in American history has ever experienced a surplus as large as this,” Newsom said.
In January 2020, before the coronavirus pandemic, Newsom’s budget called for $222 billion in total spending, meaning the state’s budget has grown by roughly 35% over two years.
He wants to plow new dollars into homelessness, tax refunds and abortion care. The governor’s budget also includes $128.3 billion for all kindergarten through 12th grade education programs, the most ever for California schools.
Newsom also released the first budget estimate for his CARE Court plan, which would set up mental health courts in all 58 California counties that would enable judges to provide treatment plans for people dealing with severe untreated mental illness.
The governor’s revised budget includes $65 million to implement the courts in 2022 and 2023, as well as $49 million in ongoing funding for the program.
Newsom cautious on surplus spending
However, Newsom’s administration also anticipates economic headwinds in the coming year. The governor noted signs of economic turmoil, such as inflation and the war in Ukraine. Those trends could make for a leaner budget next year.
His proposal provides for $37.1 billion in reserves, including $23.3 billion in the state’s rainy day fund, $9.5 billion in a school stabilization fund, $3.4 billion in an operating reserve and $900 million in a social services safety net.
With a smaller budget potentially on the horizon, Newsom also emphasized he plans to invest most of California’s surplus in one-time spending, instead of ongoing expenditures the state may not be able to meet if it doesn’t maintain the same cash flow.
“This is important, and I hope folks understand why we’re doing it,” Newsom said. “I look forward to working with the Legislature and their respective staff to discuss the imperative of caution, particularly at this moment. And what more caution do we need in terms of evidence than the last two weeks, with the markets and the volatility and the bear markets that at least two of the three major indexes are currently in.”
Even so, Republican leaders weren’t convinced Newsom’s budget represents the best plan for California.
“With a $300 billion dollar budget, the fiscal cliff is coming, and Democrats are oblivious and arrogant, the California Republican Party said in a statement. “Thanks to radical regressive policies, Californians today pay more for nearly everything they buy, while rising homelessness, failing schools, raging wildfires and a devastating drought continue to get worse.”
“Democrats have taxed their way to a mind-boggling $97.5 billion dollar surplus, and today’s May Revise budget reveals that Gavin Newsom continues to believe in more spending instead of real solutions,” the GOP continued. “Newsom and the Democrats personify the definition of insanity — they keep making the same mistakes and expecting different results. We’re confident that voters this November won’t follow suit.”
Tax refunds for vehicle owners
Newsom’s original budget prioritized homeless aid, COVID-19 response and transportation, as well as funding to combat climate change, wildfires and drought.
The revised plan adds money to provide tax refunds for all California vehicle owners. Newsom plans to spend $11.5 billion to give drivers $400 per vehicle — capped at $800 — to help cope with high gasoline prices and inflation.
Last year, by contrast, the state sent $600 stimulus checks to most taxpayers regardless of whether they owned cars.
Legislative leaders have not been supportive of this approach, saying it won’t help needy Californians who aren’t vehicle owners.
“Senate Democrats do not believe a rebate tied to car ownership does the job,” said Senate President Pro Tem Toni Atkins, D-San Diego, in a statement on Thursday. “That plan leaves out non-car owners — including low income and elderly Californians, who are also impacted by the current high costs of consumer goods and are also deserving of relief.”
He also proposed $933 million to give an estimated 600,000 nurses and health care workers bonuses as a way to help retain employees in an industry plagued by burnout.
Newsom says California is a ‘pro-life state’
In addition, Newsom wants to spend $57 million to increase reproductive healthcare access in California — including $40 million to help low-and middle-income residents without insurance obtain abortion care.
Newsom has been a staunch advocate for abortion rights. He’s defended abortion access even more fiercely since Politico published a draft US Supreme Court opinion that showed justices are on the verge of overturning Roe v. Wade, the 1973 decision that guaranteed federal abortion rights.
After the draft opinion leaked, Newsom joined legislative leaders in calling for an abortion rights amendment to the California constitution.
With states set to govern abortion access, Newsom has also been vocal about wanting the Golden State to welcome pregnant people seeking abortions in states that ban the procedure.
During his budget revision presentation Newsom drew a sharp distinction between what he sees as California’s “pro-life” approach and that of other more conservative states that restrict abortion but don’t invest in broader social needs.
“I think there’s a lot of folks out there that are pro-conception to birth. But they fall wholly short of being pro-life,” Newsom said. “Because if you’re pro-life, you’d support pre-natal care, you’d support Black infant health, you’d support child care and preschool. If you’re pro-life, you’d believe in science, you’d believe in climate change. If you’re pro-life, you would support home visiting. If you were pro-life, you’d actually support common sense gun safety. If you were pro-life, you would actually be expanding after school and preschool programs.”
This story was originally published May 13, 2022 10:00 AM.