Please ensure Javascript is enabled for purposes of website accessibility
Walters: Newsom Budget Surplus Gets Reality Check
dan_walters
By Dan Walters, CalMatters Commentary
Published 4 years ago on
May 18, 2021

Share

Gavin Newsom loves superlatives, even when they are unwarranted, and a strong surge in state revenues gave him the opportunity last week to indulge his peculiarity.

Repeatedly, the governor boasted about a $75 billion budget surplus that in combination with wad of federal pandemic aid would finance a “$100 billion California Comeback Plan” of new and expanded services, including cash payments to millions of families as part of a $267 billion budget.

“This is a generational budget,” Newsom said. “This is an historic, transformational budget. This is not a budget that plays small ball. We’re not playing in the margins. We are not trying to fail more efficiently.”

Dan Walters

Opinion

Budget Analyst Says Surplus is Closer to $38 Billion

However, the Legislature’s budget analyst, Gabe Petek, has a sharply different take. He says the true surplus that can be spent or saved over two years is more like $38 billion — still a very substantial sum but lacking the political punch of the numbers Newsom threw out.

Why the difference? It’s one of semantics. To arrive at his big number, Newsom counted money that is already committed by law to be spent or saved, such as constitutionally required aid to schools.

“The governor’s estimate includes constitutionally required spending on schools and community colleges, reserves, and debt payments,” Petek told legislators. “We do not consider these spending amounts part of the surplus because they must be allocated to specified purposes.”

Petek Cautions Newsom on Lavish Spending Plan

Petek also does not agree with Newsom’s plans for lavish new spending, saying it might cripple the state’s ability to balance the budget once the revenue bubble bursts and federal aid dries up.

“Despite a historic surge in revenues, the governor continues to rely on budget tools from last year,” Petek said. “Specifically, he uses $12 billion in reserve withdrawals and borrowing to increase spending. The state will need these tools to respond to future challenges, when federal assistance might not be as significant. We urge the Legislature not to take a step back from its track record of prudent budget management.”

Petek’s cautionary analysis obviously will not sit well with Newsom, whose expansive budget is aimed, in part, at countering a campaign to recall him by applying grease to some of the state’s squeakiest political wheels. But it also may not please his bosses in the Legislature, who not only support Newsom’s spending plans but want to go further.

Reminiscent of Gray Davis Before Recall

The situation is more than slightly reminiscent of what happened 18 years ago when one of Newsom’s predecessors, Gray Davis, also faced a recall.

Davis barely won re-election in 2002, and immediately afterwards told Californians that the state budget faced horrendous deficits that would require steep spending cuts and new taxes. He evidently believed that maximizing the fiscal crisis would make Californians more willing to accept the taxes, but it backfired badly.

Davis was accused of hiding the massive deficit as he sought re-election and Elizabeth Hill, the Legislature’s budget analyst at the time — much as Petek is doing now — revealed that Davis’ deficit number was much overstated.

Davis, as with Newsom’s surplus figure today, arbitrarily included extraneous figures that didn’t rightfully belong. His clumsy effort to manipulate public opinion jump-started the recall campaign, which resulted in his ouster a year later.

Both situations illustrate the invaluable role that Petek’s office plays in calling out governors when they engage in creative bookkeeping to advance their political goals. It has a well-earned and jealously guarded reputation for playing it straight and while its advice is not always followed, it gives the media and the larger public a consistent guide to what’s really happening in the state’s increasingly convoluted finances.

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]

DON'T MISS

What Are Fresno Real Estate Experts Predicting for 2025 and Beyond?

DON'T MISS

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

DON'T MISS

Yastrzemski and Chapman Homers Help Giants Rally Past the Brewers

DON'T MISS

Fresno City Council Finally Passes a Tough Smoke Shop Ordinance

DON'T MISS

Fresno Unified Trustee Wittrup Says District Had Stronger Candidates Than Misty Her

DON'T MISS

Trump Poised to Offer Saudi Arabia Over $100 Billion Arms Package, Sources Say

DON'T MISS

Lights, Camera, Board Vote: Fresno Unified’s Carefully Choreographed Production

DON'T MISS

US Farm Agency Withdraws Proposal Aimed at Lowering Salmonella Risks in Poultry

DON'T MISS

On Major Economic Decisions, Trump Blinks, and Then Blinks Again

DON'T MISS

Candi Is the Dandy to Add a Little Sweetness to Your Life

DON'T MISS

How Trump Tariffs Could Upend California Farms, Wine Businesses, and Ports

DON'T MISS

Tulare Man Sentenced to State Prison for DUI Crash That Injured Two Women

UP NEXT

Given Its Failures, Can California Manage a Transition to a Carbon-Free Future?

UP NEXT

Over a Century Later, California May Need Another Revolt Against Its Utility Companies

UP NEXT

California’s Economy Was Already Sluggish Before Trump’s Global Tariffs

UP NEXT

Will Fresno Unified Sacrifice Another Generation of Students? The Choice Is Ours

UP NEXT

What if There’s No Way to Stop Trump’s Approach to Power?

UP NEXT

Zakaria Draws Parallels Between Trump’s Tariffs, Failed 1930s Economic Policies

UP NEXT

Americans Haven’t Found a Satisfying Alternative to Religion

UP NEXT

I Have Never Been More Afraid for My Country’s Future

UP NEXT

Why Is It So Expensive to Build Affordable Homes in CA? It Takes Too Long

UP NEXT

What Some Animals Endure Before We Eat Them

Trump Poised to Offer Saudi Arabia Over $100 Billion Arms Package, Sources Say

11 hours ago

Lights, Camera, Board Vote: Fresno Unified’s Carefully Choreographed Production

12 hours ago

US Farm Agency Withdraws Proposal Aimed at Lowering Salmonella Risks in Poultry

12 hours ago

On Major Economic Decisions, Trump Blinks, and Then Blinks Again

12 hours ago

Candi Is the Dandy to Add a Little Sweetness to Your Life

13 hours ago

How Trump Tariffs Could Upend California Farms, Wine Businesses, and Ports

13 hours ago

Tulare Man Sentenced to State Prison for DUI Crash That Injured Two Women

14 hours ago

Judge Partly Blocks Trump Order Seeking to Overhaul US Elections

14 hours ago

Two From Search Group That Uncovered Mexico’s ‘Ranch of Horror’ Killed

15 hours ago

US Warns States They Could Lose Transportation Funding Over Immigration, DEI Policies

15 hours ago

Yastrzemski and Chapman Homers Help Giants Rally Past the Brewers

SAN FRANCISCO — Mike Yastrzemski and Matt Chapman homered as the San Francisco Giants rallied to beat the Milwaukee Brewers 6-5 on Thursday ...

9 hours ago

9 hours ago

Yastrzemski and Chapman Homers Help Giants Rally Past the Brewers

9 hours ago

Fresno City Council Finally Passes a Tough Smoke Shop Ordinance

10 hours ago

Fresno Unified Trustee Wittrup Says District Had Stronger Candidates Than Misty Her

President Donald Trump delivers remarks during an 'Unleashing American Energy' event at the Department of Energy in Washington, U.S., June 29, 2017. (REUTERS File)
11 hours ago

Trump Poised to Offer Saudi Arabia Over $100 Billion Arms Package, Sources Say

12 hours ago

Lights, Camera, Board Vote: Fresno Unified’s Carefully Choreographed Production

Chickens sit at a poultry farm. March 12, 2025. (REUTERS/Diego Vara/File Photo)
12 hours ago

US Farm Agency Withdraws Proposal Aimed at Lowering Salmonella Risks in Poultry

12 hours ago

On Major Economic Decisions, Trump Blinks, and Then Blinks Again

Candi, GV Wire's Adoptable Cat of the Week
13 hours ago

Candi Is the Dandy to Add a Little Sweetness to Your Life

Help continue the work that gets you the news that matters most.

Search

Send this to a friend