Huge surplus in hand, Governor Newsom reveals spending plan

By ADAM BEAM | Related press

SACRAMENTO – California Governor Gavin Newsom on Monday will tell everyone how he wants to spend more than $200 billion in taxpayers’ money next year as he presents the first version of his annual budget proposal. to the State Legislature.

The Democratic governor’s budget proposal is the first step in a complex process of spending hundreds of billions of dollars in taxes that Californians and businesses pay each year.

Newsom sometimes gives multiple previews of what’s in his plans before presenting. This year, he pledged $300 million to ramp up law enforcement efforts to combat retail theft and another $2.7 billion to spend on things like coronavirus testing and staffing. hospital. But that’s only a tiny fraction of the state’s budget, which last year surpassed $260 billion. Newsom has said very little about what he wants to do.

But one thing is for sure, California has a lot of money. In November, the nonpartisan Office of Legislative Analysis predicted California would run a surplus of at least $31 billion this year. Newsom’s budget proposal would likely show a much larger surplus as his administration often uses a different definition of what counts as a surplus.

Regardless, that’s a lot of money. And there’s a long way to go from the bleak time of 2020, when Newsom and state legislators cut spending, raised taxes and pulled money from the state’s savings accounts to cover what they feared. is a deficit of 54 billion USD caused by the pandemic.

That deficit never happened. Instead, state budget revenues skyrocketed like never before. In September, revenues from the state’s three largest taxes – personal, revenue and corporate income – were 40% higher than in September 2020 and nearly 60% higher than in September 2019. before the pandemic hit, according to the Office of Legislative Analysis.

Revenue rose sharply despite California consistently having the highest unemployment rate in the country in years. A big reason for that is that the state is full of wealthy people whose assets continue to climb.

Last fall, the stock price was more than double what it was at the low point of the pandemic. California has also seen many private companies go public by selling shares on the stock exchange, bringing profits to those who own or work for those companies. These people then pay capital gains tax which in California, unlike most other states, is taxed just like income.

It all creates a lot of tax money that the government has to spend. Last year, Newsom and the state Legislature returned billions of dollars to some lower-income taxpayers as stimulus checks. He might want to do it again this year.

Newsom has also promised to significantly increase spending on infrastructure, including things like roads and bridges. These types of projects are a good way to spend surplus money – which is only available for a year – because they have no recurring costs that have to be financed every year. Another advantage is that infrastructure spending doesn’t count toward a state’s constitutional spending cap, which means it can offset other spending to help legislators maintain that cap. .

Nationwide, people will be watching closely to see how Newsom wants to spend money to increase access to abortion. The US Supreme Court is considering whether to overturn or significantly weaken Roe v. Wade, the landmark decision barring states from outlawing abortion. If that happens, as many as two dozen other states could pass legislation banning or restricting access to abortion.

Last year, Newsom convened a group of more than 40 abortion providers and advocacy groups to ask their opinions on what to do if it happened. In December, the group made 45 recommendations. These include spending money to help clinics hire more staff and funding to reimburse abortion providers for patients who cannot pay – including those coming to California from other states.

In an interview with The Associated Press last month, Newsom said some of the report’s recommendations would be included in his budget proposal.

Democrats control a majority of seats in the state Legislature, meaning they can pass the budget without a Republican vote. Newsom’s budget proposal will change as he negotiates with Democratic leaders, but both sides largely share the same goals.