Newsom Announces $144 Billion Budget; Projects $21 Billion Surplus

Modesto Morganelli
Gennaio 11, 2019

The Democratic governor is announcing his plans during a time of sustained prosperity in California, which clawed back from a $27 billion deficit following the Great Recession that required deep and painful cuts to education, health care and just about every other service offered. Newsom's plan includes $13.6 billion to boost reserves and pay down debt and pension liabilities.

Like Brown, Newsom said he is girding the state against an inevitable recession.

With additional bond fund revenue and "special fund" allocations of $64.8 billion, total state spending proposed by Newsom for the upcoming fiscal year that begins in July would come to $209 billion.

The budget expands the earned income tax credit, adds $1.3 billion for housing development and almost $2 billion for early childhood education and care.

The nonpartisan legislative analyst projected in November that lawmakers would have a $15 billion surplus to allocate next year on top of $15 billion in the rainy day fund, which is at the maximum allowed under the state Constitution.

The general fund would include a record $80.7 billion in spending for public school education from kindergarten through 12th grade, which Newsom said would rank as the largest such expenditure in state history.

"I'm about to announce an interesting surplus - that will be a little more interesting than the one you've been reading about or writing about", he told reporters after announcing new wildfire prevention efforts in Colfax on Tuesday.

He promised in his inaugural address Monday that his budget would be bold.

"We're assuming we're going to continue the economic expansion", Newsom said during his budget presentation in Sacramento. He says 86 percent of the new spending is for one-time investments.

Budget highlights include $750 million to expand full-day kindergarten, $402 million for community colleges, including a second year of tuition-free education to full-time students, and $125 million to help phase in universal preschool for all income-eligible 4-year-old children over the next three years.

Newsom has also proposed expanding state-funded health care to low-income people living in the country illegally until their 26th birthday, up from a current cutoff age of 19.

Newsom also plans to increase subsidies for people who buy their own insurance, rather than getting it from an employer or government program.

Details of Newsom's plan weren't immediately available, but last year's proposal would have taxed residential customers 95 cents a month, to raise about $110 million a year. The program is funded through a payroll tax. It's unclear how he'd pay for a full six-month program.

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