Please ensure Javascript is enabled for purposes of website accessibility
Walters: Newsom Budget Spends Windfall on Pandemic Victims
dan_walters
By Dan Walters, CalMatters Commentary
Published 3 years ago on
January 11, 2021

Share

While California’s overall economy is still being battered by the COVID-19 recession and unemployment remains high, its tax revenues have shown amazing resiliency.

The recession’s impact has fallen largely on lower-income Californians while those on upper rungs of the socioeconomic ladder, whose taxable incomes are the most important source of state revenues, have continued to prosper.

Dan Walters

Opinion

Thus the $54 billion budget deficit that Gov. Gavin Newsom projected last summer as the economy tanked never appeared and suddenly, there’s a windfall of unanticipated revenues that Newsom wants to spend on helping the pandemic’s economic victims — low-income families and small businesses, especially — recover.

“We are investing, in our energy and our focus, to deal with the disproportionate impacts of this pandemic,” Newsom said Friday as he introduced a $227.2 billion budget for the fiscal year that will begin on July 1.

Newsom wants the Legislature to jump-start pandemic relief with a $5 billion “immediate action package.” It would, for low-income families, double the $600 payments in the most recent federal aid legislation, and provide direct aid to small businesses that Newsom ordered to be closed to battle spread of infection. He also proposes extending a moratorium on evictions of recession-strapped renters.

His Proposed Budget Is a Curious Mixture of Billions of Dollars in Additional Spending

Newsom clearly wants to shine the media spotlight on his relief proposals, rolling them out prior to Friday’s formal presentation, which raises a perhaps cynical question: Does his plea for fast action reflect their importance, or his concerns about a recall movement that seems to be gathering steam?

The recession’s economic impacts — especially on restaurants, barbershops and other small businesses forced to close their doors — have clearly given impetus to the Republican-sponsored recall movement, which has two months to collect enough signatures to place the issue before voters.

Even if one assumes Newson’s proposals are expressions of genuine concern, not motivated by personal politics, his proposed budget is a curious mixture of billions of dollars in additional spending and worries that another budget crisis is looming on the horizon.

Newsom boasts of having $34 billion in “budget resiliency,” mostly in the form of reserves. His budget also warns, “budget resiliency will be critical to protect programs in the future, as expenditures are projected to grow faster than revenues, with a structural deficit of $7.6 billion projected for 2022-23 that is forecast to grow to over $11 billion by 2024-25.”

He Won’t Entertain New Taxes on the Wealthy Being Championed by Some of His Fellow Democrats

Much of the budget is on autopilot with built-in increases, particularly the largest single portion, K-12 education, and those increases, coupled with very slow projected revenue growth, create the structural deficit. Revenues from the state’s three major tax sources — personal income, sales and corporate income — are projected to grow by an average 1.9% a year through mid-decade while spending increases now in law will far exceed that rate.

Newsom cited the long-term income/outgo squeeze when a reporter asked him about his long-standing pledge to bring universal single-payer health care to Californians, which would cost tens of billions of dollars.

He said he stands by that goal but in the next breath once again insisted that he won’t entertain new taxes on the wealthy being championed by some of his fellow Democrats, implying fear that they would drive away high-income Californians whose taxes are so vital.

Recently, Elon Musk was crowned as the world’s richest man due to soaring stock values of Tesla, his electric car company. His coronation came just a few weeks after he moved to Texas, which has no income tax, with a farewell blast at California’s treatment of entrepreneurs.

An utter dependence on the wealthy underscores the yin and yang of budget politics in a very blue state.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more stories by Dan Walters, go to calmatters.org/commentary.

[activecampaign form=19]

RELATED TOPICS:

DON'T MISS

When Newsom Gives His State of the State, He Should Be Candid About California’s Economy

DON'T MISS

CA’s Liberal Government Has a Long History of Caving to Special Interests

DON'T MISS

Newsom, Legislators Opt for Gimmicks and Wishful Thinking to Close California’s Budget Deficit

DON'T MISS

Courage to Embrace Change: El Rio Reyes Conservation Trust Boldly Rebrands as Kings River Land Trust

DON'T MISS

Committed to Politics or Committed to Fresno’s Children?

DON'T MISS

Repealing Prop. 47 is a Misguided Battle Cry. It Won’t Make California Safer.

DON'T MISS

Misty Her Might Be Best Superintendent Candidate. But Fresno Unified Still Needs a Statewide Search.

DON'T MISS

How California’s Prized Solution for Methane Gas Is Backfiring on Farmers

DON'T MISS

Many Californians Rely on This Farmers Market Program. Newsom Wants to Cut It

DON'T MISS

Carbon Capture Storage Is Key to California’s Economy & Energy Future

No data was found

Facebook News Tab Will Soon Be Unavailable as Meta Scales Back News and Political Content

12 hours ago

Stock Market Today: Wall Street Rises to More Records to Close Out Its Latest Winning Month

12 hours ago

A Fresno County First: Kerman Council Passes Amended Gaza Cease-Fire Resolution

12 hours ago

UN Top Court Orders Israel to Open More Land Crossings for Aid into Gaza

12 hours ago

How Involved Is Southern California Consulting Firm in FUSD Executive Dealings?

13 hours ago

Biden’s Fundraiser with Obama and Clinton Nets a Record $25 Million, His Campaign Says

13 hours ago

Fresno Unified’s Self-Protection Racket Is Hurting Our Kids

14 hours ago

Rockin’ Out or Laughing, the Valley Has Its Pick of Weekend Events

14 hours ago

Ex-Correctional Officer at Women’s Prison in California Sentenced for Sexually Abusing Inmates

17 hours ago

Caitlin Clark and Iowa Draw Nearly 5 Million Viewers for Second-Round NCAA Win

17 hours ago

PGA HOPE at Riverside Golf Course Introduces Military Veterans to the Game

PGA HOPE, now underway at Fresno’s Riverside Golf Course, is designed to introduce golf to veterans and active duty military members t...

10 hours ago

PGA HOPE at Fresno's Riverside Golf Course
10 hours ago

PGA HOPE at Riverside Golf Course Introduces Military Veterans to the Game

12 hours ago

Cronenworth’s Big Hit Helps Lift the Padres to a 6-4 Win Over Melvin’s Giants

12 hours ago

Shohei Ohtani Reaches 3 Times in Home Debut as the Dodgers Rout the Cardinals 7-1

12 hours ago

Facebook News Tab Will Soon Be Unavailable as Meta Scales Back News and Political Content

12 hours ago

Stock Market Today: Wall Street Rises to More Records to Close Out Its Latest Winning Month

12 hours ago

A Fresno County First: Kerman Council Passes Amended Gaza Cease-Fire Resolution

12 hours ago

UN Top Court Orders Israel to Open More Land Crossings for Aid into Gaza

13 hours ago

How Involved Is Southern California Consulting Firm in FUSD Executive Dealings?

MENU

CONNECT WITH US

Search

Send this to a friend