NEWS FLASH - Governor Newsom Releases 23' - '24 Budget

According to Governor Newsom's office, California is facing a projected $38 billion budget deficit, and the Governor has outlined his plan to address the fiscal challenge. This deficit projection is far less severe than that of nonpartisan legislative analysts, who estimated a $68 billion deficit for the upcoming fiscal year. Newsom attributes the difference to a more optimistic outlook on revenues, assuming $15 billion more than the legislative analysts. “We’re just a little less pessimistic,” said Newsom. His plan to close the deficit involves withdrawing $13.1 billion from reserve accounts, cutting $8.5 billion from various programs including climate, housing, and education, delaying $5.1 billion in spending, including on transit, and deferring another $2.1 billion to 2025-26. Internal borrowing of $5.7 billion from special funds is also part of the strategy. Newsom aims to protect investments in addressing homelessness, mental health reform, and public safety. The proposed total state budget is $291.5 billion, about $19 billion less than the previous year. The deficit is attributed to an $11.8 billion drop in revenues, mostly attributed to delayed income tax filings resulting from winter storms. 

The budget plan faces scrutiny from lawmakers, with adjustments likely before the June 15 deadline.

The League of California Cities has already asked the Governor for a $3 billion funding stream to increase affordable housing and reduce homelessness. This is up from $1 billion that Newsom has committed annually to local homelessness programs. 

“As the governor pulls revenue gimmicks and accounting tricks, it’s impossible to bury the truth: California is bleeding because of a decade of Democrats’ one-party rule and reckless spending,” Senate GOP leader Brian Jones said in a statement.

Plan to Close the $38 Billion Deficit:

• Withdraw $13.1 billion from the budget stabilization and safety net reserve accounts.
• Cut $8.5 billion from existing programs and services, including climate, housing and education.
• Delaying $5.1 billion worth of spending, including on transit.
• Deferring $2.1 billion to 2025-26, including about $500 million in additional funding for University of California and California State University
• $5.7 billion in internal borrowing from special funds to support the tax on health care providers.

Other Specific Budget Cuts:

• $4 billion in cuts to climate change and housing programs.
• Lowering by $500 million the amount of money public schools will have for constructing new buildings or maintaining existing ones — from $875 million to $375 million. 
• Phase out nearly $500 million in no-interest loans to public colleges and universities for building additional student housing. 
• Cut a planned $289 million expansion of the newly revised Middle Class Scholarship, choosing instead to maintain it at its base level of more than $600 million annually. 
• Pulling $300 million in promised funds to develop a new research center studying the human body’s immune system. The money was meant for UCLA, part of an overall $500 million package.