January 17, 2022
Weideman Group Weekly
Show Me the Money!
Governor Gavin Newsom unveiled his budget proposal for the 2022-2023 fiscal year. The Governor’s proposed budget totals $286.4 billion, which takes into account an estimated $45.7 billion surplus. This marks consecutive years where California will see a significant surplus, giving the Governor and the Legislature the opportunity to make historic investments in some of the most pressing issues facing the state. The Governor laid out five areas his budget is focused on: Fighting COVID-19, Combating the Climate Crisis, Confronting Homelessness, Tackling the Cost of Living, and Keeping our Streets Safe.
Budget highlights include $2.7 billion aimed at preparing the health care delivery system for surges, protecting frontline workers, improving testing in the state, battling misinformation around COVID-19, and promoting boosters. The Governor is also proposing $1.4 billion in emergency funding to jump start these efforts before the budget is passed.
Combating the Climate Crisis
The budget continues California’s leadership to combat the climate crisis. Budget highlights include $10 billion for zero-emission vehicles that will go towards funding electrification of transit buses, drayage trucks, schools buses, ports, passenger vehicles, which includes 40,000 new cars and 100,000 new charging stations. Additional investments include $380 million for long duration storage, $100 million for green hydrogen, $45 million for offshore wind, and $1 billion for a green tax credit over 3 years. The budget also calls for $2.7 billion for forest health and fire protection and $500 million in support of California’s ongoing drought conditions.
Homelessness remains a top priority for Governor Newsom, with $14 billion to be invested in 55,000 new housing units, $2 billion for mental health housing services, $500 million to clear encampments, and Project Homekey.
Tackling the Cost of Living
One of the boldest announcements from Governor Newsom was that California will achieve universal healthcare coverage by January 1, 2024. Components designed to achieve affordable universal care include, expanding Medi-Cal coverage to all income eligible adults aged 26-49 regardless of immigration status, $30 million to implement the Office of Health Care Affordability, over $6 billion over the next few years for Cal-AIM which seeks to strengthen the state’s Medi-Cal program, and a proposal that will establish CalRx. CalRx is an initiative where the state will contract with drug manufacturers to produce insulin at an affordable price. Along with prioritizing healthcare, the state will invest in achieving universal pre-K and adding thousands of childcare slots.
Keeping Our Streets Safe
Budget highlights include investing $255 million in grants for local law enforcement agencies, monies for more prosecutors to give district attorney’s offices the tools they need to effectively prosecute crime, funding for gun buybacks, and increasing enforcement of drug smuggling at the border. Many of these public safety proposals come on the heels of increased retail crime and an ongoing opioid epidemic.
Now that the Governor has released his budget, the Assembly and Senate Budget committees will hold hearings on the specifics of the proposal. The budget committees engage in negotiations with the Administration and they will also hear additional budget requests coming from legislators and stakeholders. In May, the Governor will release a May Revise that takes into consideration updated revenue figures. Newsom has noted that it is very likely the state will exceed the Gann limit, a constitutional measure limiting how much the state can spend relative to the prior year’s expenditures and how excess funds can be distributed. Once the Gann limit has been triggered, excess funds must be spent on education, infrastructure or tax rebates – the Governor has indicated that a significant tax rebate might be included in the May Revise. The Legislature has until June 15 to pass a balanced budget, with additional budget action possible up until the end of session in August.