A journey of a thousand miles begins with a single step — just like the one Assembly Democrats took Wednesday, after they unveiled their budget priorities for the upcoming fiscal yr.
The move marks a begin to months-long negotiations between Gov. Gavin Newsom and state lawmakers over how money must be divided between key programs — an exercise that may prove contentious even in the very best of times, and will pose especially tough political questions this go-around because the state stares down an estimated $25 billion budget deficit after having fun with years of unprecedented surpluses.
Although the Assembly Democrats’ blueprint emphasizes that California is healthier positioned to weather an economic downturn than it has been previously — with $120 billion in available money across all funds, including $37 billion budgeted on the whole fund and rainy day fund reserves — it also adopts a few of the cautionary recommendations outlined last month by the Legislature’s nonpartisan fiscal advisor. They include:
- Potentially shifting billions of dollars in expenditures to later years, and re-evaluating the timing of one-time spending.
- Considering low-cost borrowing from special funds if California keeps collecting lower-than-expected tax revenue.
- Evaluating the impact of inflation on certain state expenditures. Since the Legislative Analyst’s Office estimate of a $25 billion budget deficit didn’t account for soaring inflation rates, actual state costs are more likely to be higher than estimated.
“We’ve got spent a decade preparing for revenue shortfalls, and with the robust General Fund reserves and Rainy Day Fund, California is ready to weather future economic downturns while still prioritizing the gains that we’ve got made in K-12 and early childhood education, our higher education institutions, homelessness support and health care,” Democratic Assemblymember Phil Ting of San Francisco, who leads his chamber’s powerful budget committee, said in a press release.
The subsequent major step within the budget marathon: Newsom releasing his blueprint for the fiscal yr starting July 1, which he’s slated to do on or before Jan. 10. He’ll then unveil a revised proposal in May after negotiations with lawmakers and updated revenue estimates. They have to reach a spending deal by June 15, though that deadline is squishier than it seems: In the course of the last budget cycle, lawmakers passed what amounted to a placeholder budget to maintain receiving their paychecks while they worked out final details with Newsom.
One other noteworthy budget priority highlighted by Assembly Democrats: Asking voters in 2024 to weigh in on a ballot measure to “craft a modernized Gann Limit … to encourage constructing reserves and reducing debts.”
The Gann Limit is an obscure provision within the California Structure that stops the state from spending more per person than it did in 1978, once adjusted for inflation, and requires it to send the surplus a refund to colleges and taxpayers.
Because the economy continues to grow, the Gann Limit will pose an increasingly large problem for state government, based on a March report from the Legislative Analyst’s Office — leaving the Legislature with just two decisions: Reduce taxes to cut back revenue growth, or ask voters to vary the limit.
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Other Stories You Should Know
1
California takes health care to the streets
Living on the streets of California is a deadly affair.
That’s how CalMatters health reporter Kristen Hwang put it so eloquently in her examination of how the state is overhauling Medi-Cal — its health care insurance program for the poor — to make it easier for the growing homeless population to receive much-needed primary care and stay out of costly emergency rooms. The state’s changes encourage Medi-Cal insurers to fund and partner with some 25 existing street medicine teams, which have long brought primary care into encampments but have historically relied on volunteers and philanthropic funds to remain afloat. Now, with an infusion of state money and support, street medicine teams are longing for more stability, whilst they acknowledge that much of their work stays unfunded.
- Brett Feldman, co-founder and director of USC’s Keck School of Medicine street medicine program: “Where we’ve got been falling short, especially with this (homeless) population, is their reality is so different from ours that we haven’t been constructing reality-based systems for them. … They’ve Medi-Cal. They’re eligible for all these advantages, but they will’t access these advantages.”
- For instance: Medi-Cal covers transportation to and from a physician’s appointment, nevertheless it requires the patient to offer a set address and provides several weeks’ notice to the driving force, something most unhoused people aren’t capable of arrange.
- Jacey Cooper, director of the state’s Medi-Cal program: “Considered one of our core principles of CalAIM (this system to overhaul Medi-Cal) is breaking down the partitions of health care and meeting people where they’re. We actually feel like street medicine helps us do this.”
In other health care news: Newsom announced Wednesday nearly $481 million in grants to enhance behavioral and mental health facilities for California youth, a part of the state’s $4.4 billion plan to rework the kids’s mental health system.
2
$757M in bids for CA offshore wind auction
The federal government’s first-ever auction for leases to construct massive wind farms off California’s coast netted final bids of $757.1 million Wednesday, signaling the start of a competitive marketplace for a latest industry producing carbon-free electricity, CalMatters’ Nadia Lopez reports. Although the whole amount — to be paid by five energy corporations — was significantly smaller than the record-breaking $4.37 billion paid in February for six offshore wind leases off Latest York and Latest Jersey’s coasts, many viewed the auction as a hit, provided that the West Coast is an untested and difficult marketplace for constructing offshore wind farms. The auction included five parcels of deep ocean waters off Morro Bay and Humboldt County.
- Newsom said in a press release: “This sale is an historic step on California’s march toward a future freed from fossil fuels. Along with leadership from the Biden-Harris Administration, we’re entering a latest era of climate motion and solutions that give our planet a latest lease on life.”
- Molly Morris, president of Equinor Wind US, one in every of the businesses that won a lease, said a press release: “The US West Coast is one of the attractive growth regions for floating offshore wind on the earth as a consequence of its favorable wind conditions and proximity to markets that need reliable, clean energy.”
- Latest Assemblymember Dawn Addis, a Morro Bay Democrat, said in a Tuesday statement: “While the sale of those leases is a critical and transformative step to providing clean energy to California, the event of offshore wind off the central coast will impact our communities in ways we will’t fully appreciate today. In the approaching years, state and regional policymakers must seriously examine how offshore wind farms affect what makes the coast great — our fisheries, public beaches, native lands and our economy, including tourism.”
3
Newsom loses top labor official
The latest high-ranking official to exit the Newsom administration: Natalie Palugyai, whom the governor appointed to steer the California Labor and Workforce Development Agency last yr after then-Secretary Julie Su was tapped for a post within the Biden administration, the Sacramento Bee reports. The governor’s office didn’t provide a reason for her departure; Newsom spokesperson Erin Mellon told the Bee, “We thank Natalie Palugyai for her work within the administration and want her well in her next chapter.”
Whomever Newsom chooses to interchange Palugyai shall be charged with implementing controversial laws, including a latest law making it easier for farmworkers to vote in union elections and one other making a state council to manage wages and dealing conditions within the fast food industry — which business groups are searching for to overturn via a proposed 2024 referendum. Palugyai’s departure also comes as California deals with ongoing legal battles over state labor laws.
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