Governor Gavin Newsom sent a budget to the California Legislature on Friday that calls for a rapid and expansive boost in the state government’s response to the COVID-19 pandemic, reserving much of the unallocated tax revenue for efforts to help workers and companies, increase public health and speed up the reopening of public school rooms.
In all, the proposal devotes more than $ 14 billion to a series of coronavirus relief initiatives, while setting aside money to support vaccination efforts against the virus and nearly $ 3 billion in short-term cash reserves, should they arise. additional needs. Newsom urged lawmakers to take action on the most urgent issues – including an extension of the state’s moratorium on evictions and funding for California’s COVID-19 vaccination effort – by the end of the month.
“We can’t wait,” said Newsom during a long budget presentation in Sacramento. “In this environment, you cannot wait.”
The centerpiece of the governor’s economic stimulus plan – a $ 4.5 billion plan announced on Wednesday – would provide cash infusions for existing state programs that offer corporate tax credits and apprenticeship programs affiliated with community colleges. The money would also go to speed up housing construction in urban and neighborhood settings, and subsidies for low-income Californians to buy zero-emission cars and trucks. An additional $ 500 million would be available for tax credits to encourage the creation of additional housing for low-income Californians.
“It is an incredible time in terms of anxiety, but an incredible time of opportunity to address these issues,” said the governor.
Newsom also proposed cash payments of $ 600 for the lowest paid workers in the state, funds he expects to be distributed in February and March and estimated at $ 2.4 billion. Its budget plan also calls on lawmakers to accelerate the use of $ 2.6 billion in federal funds for struggling tenants and new assistance for homeowners whose mortgage payments are at risk as a result of unpaid rent.
While Democratic legislative leaders applauded the governor’s proposals, there were indications of concerns raised last year about the legislature’s ability to oversee important spending decisions made quickly in response to the ongoing health emergency. Assembly President Anthony Rendon (D-Lakewood) called for “careful supervision” of pandemic relief expenses.
“We want to make sure that aid for the unemployed, small businesses, non-profit organizations and others is distributed equally and efficiently. The same kind of careful budgeting over the past decade has provided the surplus that softened the COVID coup in 2020, ”said Rendon in a statement.
Newsom’s ability to act on its own may extend to spending money in support of vaccination efforts across California. Its budget, finalized weeks before federal officials approved vaccines, sets aside $ 372 million for state-sponsored efforts. Although local officials and health professionals have a more direct role in delivering vaccines, the governor said on Friday that he believes at least 1 million injections of the COVID-19 vaccine should be completed by January 17.
“Here’s the next thing to blame me for,” he said of the pledge.
The budget proposal predicts that even if some sectors of California’s workforce have remained stable, the high demand for unemployment insurance will continue. Newsom’s proposal expects the state to borrow $ 48.3 billion from a federal unemployment trust fund to cover benefits provided to state residents. Federal rules require states to pay interest on these loans, and California officials expect the loan to cost $ 555 million in the next fiscal year. The governor’s budget also includes $ 11.4 million for the California Department of Technology to review and improve services in selected key departments, including the Department of Employment Development.
Not all of the governor’s proposals offer additional money to resolve urgent problems. The plan he revealed last week for some of California’s youngest students to return to classrooms in February depends on $ 2 billion in tax revenues already guaranteed to public schools under the state constitution. Newsom’s proposal would distribute these dollars differently: school districts that complete COVID-19 security plans for face-to-face instruction by February 1 would receive at least $ 450 and up to $ 800 per student for pandemic-related needs – even if local virus transmission rates are too high for students to return next month.
Schools that do not complete the planning process by March 1 will receive smaller scholarships per student. The plan would require participating public schools to offer all elementary school students the option of attending at least some classes on campus by mid-March, if public health conditions permit.
But schools’ reopening deadlines cannot be met if the legislature fails to take action on the plan this month. Even so, school district officials may find the governor’s schedule challenging. A major obstacle may be that reopening plans must be endorsed by local unions representing teachers and school officials.
Schools would also be encouraged to offer new summer programs and additional efforts to lessen the impact of learning disruptions caused by remote education. In all, Newsom’s plan reserves $ 4.6 billion for these services.
The various proposals released on Friday cover a review of the existing budget that the governor signed last summer and his $ 227.2 billion spending proposal for the fiscal year beginning July 1. Lawmakers have a greater opportunity this year for a course correction at the midpoint of the current budget cycle, the result of several sectors of California’s economy doing better than expected during the first nine months of the public health crisis.
Some of last year’s spending cuts would be reversed if lawmakers adopted Newsom’s plan. Colleges and universities would collectively see a $ 951 million increase in funding for the next academic year. And spending on the state’s judicial system would increase by $ 381 million, with a focus on ensuring that the pandemic does not create long delays in handling criminal cases.
How the state’s financial situation went from risky to robust is a story centered on uncertain economic conditions last spring.
When lawmakers adopted last year’s tax revenue forecast, it was expected that an unprecedented number of Californians could lose their jobs, with many seeking help from the state’s health and human services programs. Unemployment increased dramatically during much of 2020, but millions of middle-class and high-income workers were able to keep their jobs and work from home. Tax collection also increased after the strength of the stock market boosted the capital gains made by the state’s wealthiest taxpayers.
The monthly tax collection during the last summer and fall consistently exceeded expectations. In November, independent legislative analysts predicted last year’s overly pessimistic budget projections could result in up to $ 26 billion in unexpected cash for state programs. Newsom’s budget largely agrees with the legislative forecast, but assumes that part of the money will be used to fund social safety net programs and that a large part should, by law, be set aside in California’s long-term cash reserves. .
The cascading effects, together with the expectation of additional stimulus and pandemic help from the federal government, can offer the state government considerable shelter from the economic storm. It can also lead to some surprises, nothing more shocking than the potential for modest, but notable $ 51 million in taxpayer refunds under an obscure 1979 law that measures spending, personal income and population growth to determine whether Californians should get a discount on your taxes. The final determination as to whether this will happen will not arrive until spring.
Times staff writer Patrick McGreevy contributed to this report.