STATE BUDGET:
Newsom's Revised Budget Proposes $12.2 Billion Increase in State Spending

Gavin Newsom Proposes $12.2 Billion Increase in State Spending

Governor Gavin Newsom on May 9 released his revised budget for the 2019-20 fiscal year, proposing total state spending of $213.6 billion, an increase of $12.2 billion (approximately 6 percent) more than the budget approved for 2018-19.

The “May revise” adds $4.5 billion in spending to the proposal released by the governor in January. Newsom did not propose additional taxes, but retained the original plan’s tax on water users to fund a clean-water program, and a penalty for Californians who don’t buy health insurance (the “individual mandate”).

Under the revised plan, state general fund expenditures would grow from $138.7 billion to $147 billion, an increase of $8.3 billion (6 percent) from the current fiscal year.

Under the revised plan, state general fund expenditures would grow from $138.7 billion to $147 billion, an increase of $8.3 billion (6 percent) from the current fiscal year.

The revision also proposes to increase the amount deposited into the Budget Stabilization Account to pay down the state’s debt and shore up budget reserves by $390 million more than what was proposed in January.

During a 90-minute press conference, Newsom said the state has a $21.5 billion surplus and record reserves. “We’ve never been more prepared as a state” for a possible economic downturn, Newsom said.

Public education remains the top priority in the budget, with K-14 education accounting for more than 52 percent of general fund spending.

The revision adds $1.1 billion to the January proposal’s budget for K-12 education, representing the highest investment in K-12 education in the state’s history, Newsom said.

CalTax President Robert Gutierrez said the budget illustrates the importance of protecting job growth and economic activity in California.

“The May Revise shows that the best source of new revenue is a growing economy,” Gutierrez said. “Without higher taxes, California has a strong rainy day fund, a $21.5 billion surplus and record education spending.”

Newsom cited California jobs as a critical factor in the state’s health, particularly in the effort to reduce homelessness.

“This homeless issue is out of control, this homeless issue – like the housing issue – is a crisis,” Newsom said. “It is a stain on the state of California. This homeless issue is rightfully top of mind for people all across the state. They’re outraged by it, they’re disgusted by it, and they’re wondering what the hell’s going on in Sacramento, and they should. … Something we don’t talk about enough when it comes to the issue of homelessness is jobs. If we’re going to solve homelessness, it’s not just housing, it’s self-sufficiency, it’s jobs.”

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