Grim Tale on the State Budget

From CalMatters: ...Whatever projections you go by, the budget deficit will influence nearly every policy decision the Legislature will make as it hammers out a budget agreement. On Thursday, Senate Democrats got a jump start by announcing early budgetary action to “shrink the shortfall” by about $17 billion, while agreeing to the use of $12.2 billion of the state’s rainy day fund that Newsom proposed earlier. The result is a proposal that reduces the state deficit to what Senate Leader Mike McGuire of Santa Rosa and Senate budget committee chairperson Scott Wiener of San Francisco say is a “more manageable” $9 to $24 billion. Doing this in the spring sets up lawmakers to tackle more of the deficit when the Legislature and Newsom must come to a deal by late June for the 2024-25 budget, the Senate leaders said.

McGuire, in a statement: “The Senate’s plan to shrink the shortfall protects core programs, includes no new tax increases for Californians, makes necessary reductions, and takes a prudent approach to utilizing the Rainy Day Fund so we can be prepared for any future tough times.” The plan includes cuts to various programs in 2024-25 by $2.1 billion, deferring and delaying about $4.6 billion in spending and increasing revenue or borrowing by $3.6 billion. The Senate is also contemplating $3.7 billion in spending cuts, delays, shifts and other budget tweaks for the current budget year.

In response to Thursday’s Senate proposal, Newsom said in a statement that he looks “forward to seeing this proposal move forward quickly.” Today, he visited the Capitol to talk to legislative leaders on the budget. The Legislative Analyst’s Office has presented lawmakers options to claw back some of the money agencies can spend now beyond what Newsom proposed in January — such as in higher education and programs to combat climate change — to have more cash left over to tackle future deficits. The point is to “pause program implementation and capture savings,” the office wrote.  

Jesse Gabriel, an Encino Democrat and chairperson of the Assembly’s budget committee, said Friday that his colleagues will review the Senate’s plan “closely over the coming weeks.” Gabriel also said he anticipates cuts to climate change and that housing programs will be under the microscope, but that there will be no new taxes on individuals or families in the 2024-25 budget.

Gabriel: “We are saying our prayers and lighting our candles and lighting our incense and hoping that… our revenues come in better than expected.” ...

Full story at https://calmatters.org/newsletter/california-budget-senate-early-action/.