State Budget

Democratic legislative leaders announced June 1 that they have reached a budget agreement and will now negotiate with Governor Gavin Newsom over differences between their $267.1 billion plan and the $267.8 billion budget proposed by the governor. The legislative budget largely mirrors the governor’s plan and proposes $196.1 billion in general fund spending, compared to $196.8 billion in Newsom’s proposal. Both plans represent significant increases from the $165.2 billion in general fund spending in the budget approved last summer, and…

State revenue for the first nine months of the current fiscal year is $16.7 billion ahead of the projections in Governor Gavin Newsom’s January budget proposal, the Department of Finance announced April 23. In March alone, the state collected $2.3 billion more than the $8.9 billion the governor had predicted for the month. The governor’s budget, which will be updated in mid-May, anticipated revenue of $120.5 billion in the first nine months of 2020-21. “A significant amount of receipts above…

California’s voter-approved state spending limit – which requires the state to return money to taxpayers and dedicate more money to schools if revenue is above a prescribed limit over two consecutive years – will be a “major issue” in the budget process beginning this year, the Legislative Analyst’s Office (LAO) reported April 21. The report is an indication that any tax increases approved by the Legislature and governor would not go into the general fund, but would have to be…

Governor Gavin Newsom signed several budget bills February 23 after the Legislature fast-tracked measures that Newsom said are needed immediately to help Californians affected by the pandemic. “This critical assistance – including child care, relief for small business owners, direct cash support to individuals and households, financial aid for community college students and more – will help keep our communities afloat as the state continues to confront the immense challenges of this moment,” Newsom said in a press release announcing…

Governor Gavin Newsom and Democratic legislative leaders announced February 17 that they have reached an agreement on portions of the state budget intended to help Californians who have been affected by the pandemic. The stimulus package includes $9.6 billion in budget changes – spending increases and relief measures – including $4.7 billion directed to small businesses, according to Senator Nancy Skinner, chair of the Senate Budget and Fiscal Review Committee. The deal – negotiated behind closed doors and not discussed…

Revenue from the state government’s three largest taxes beat budget projections by $3 billion (21 percent) for the month of December, the Legislative Analyst’s Office (LAO) reported January 20. The projections for the personal income tax, corporation tax and sales tax were included in the 2020-21 budget approved by the Legislature and governor in June.  “Collections beat expectations across all components of the three taxes, with income tax withholding being the single largest contributor to higher-than-expected collections,” the LAO staff…

State Auditor Elaine Howle reported August 25 that her office has designated the state’s management of federal funds related to COVID-19 as a high-risk statewide issue. Congress enacted legislation in March and April that included funding for states to help mitigate the effects of COVID-19. The auditor reviewed information about this funding that California departments received, or expect to receive, and made the “high-risk” determination “based on our evaluation of several factors including, but not limited to, the following: The…

Governor Gavin Newsom and Democratic legislative leaders announced June 22 that they reached an agreement on the 2020-21 state budget, and three days later the Senate voted to approve 18 budget trailer bills to implement the deal. The Senate’s approval of AB 89 (Ting), “the budget bill junior,” came Thursday evening with a party-line 29-11 vote. The budget passed June 15 by the Legislature (SB 74) relied heavily upon possible receipt of federal funds to balance the budget. The new budget agreement…

Both houses of the Legislature are scheduled to vote Monday on a budget deal that includes $9.2 billion in tax increases on California businesses via a suspension of the net operating loss deduction and a $5 million-per-year limit on business tax credits – including the research-and-development credit – for three years retroactive to the beginning of this year. CalTax is leading a coalition of more than 50 trade associations and local taxpayer groups in opposition to the tax increases, which…