The plan doesn’t touch Gov. Newsom's major spending commitments, including free health insurance for all low-income adults regardless of immigration status. (AP File)
![](https://gvwire.s3.us-west-1.amazonaws.com/wp-content/uploads/2024/03/16173534/highlights-banner-blue-300x94-1.png)
- Deficit could be as large as $73 billion, according to the nonpartisan LAO.
- Plan includes cut of $3.6 billion in primarily one-time funding to schools, welfare, and climate programs.
- Republicans slam the plan, saying they had no input.
Share
Getting your Trinity Audio player ready...
|
SACRAMENTO — California Democratic leaders announced Thursday that they’ve agreed on a plan to reduce the state’s staggering multibillion-dollar shortfall by $17.3 billion via spending cuts, delays, and deferrals.
Gov. Gavin Newsom had enjoyed unprecedented surplus budgets of more than $100 billion throughout the COVID-19 pandemic. But the past two years have saddled him with multibillion-dollar deficits, a less-welcome position for a governor seen as a potential future Democratic presidential candidate.
Last year, facing a $32 billion deficit, Newsom and lawmakers avoided major spending cuts by making smaller cuts, borrowing, and pushing some expenses to future years.
But this year’s deficit could be as large as $73 billion, according to the nonpartisan Legislative Analyst’s Office. Newsom said in January the deficit is $37.9 billion — a shortfall that, while still steep, is much easier to manage for a state with revenues expected to exceed $291 billion.
In January, Newsom proposed tapping $13 billion from reserves and cutting $8.5 billion in spending, with about half of those cuts spread across various housing and climate programs. Last month, Newsom and Democratic leaders in both houses announced they had agreed on solutions to address the deficit without sharing details.
Details of the New Agreement
The new agreement with Democratic lawmakers, who hold supermajority in both houses, includes many proposals Newsom and the state Senate laid out earlier this year. The plan calls for a cut of $3.6 billion in primarily one-time funding to some schools, welfare, and climate programs, leaving out previously proposed $1.2 billion cuts to housing and homeless programs. The plan also delays and defers about $5.2 billion in spending for a variety of programs including on public transit and facilities for preschools. It also authorizes Newsom to freeze additional one-time funding included in the budget for the last three years.
The agreement came after lawmakers passed legislation to increase the state’s tax on managed care health plans, also known as the managed care organization tax, which is estimated to generate $3.8 billion next fiscal year. The plan doesn’t touch the governor’s major spending commitments, including free health insurance for all low-income adults regardless of immigration status.
“We are able to meet this challenge thanks to our responsible fiscal stewardship over the past years, including record budget reserves of close to $38 billion,” Newsom said in a statement. “There is still work to do as we finalize the budget and I look forward to the work ahead together to continue building the California of the future.”
Vote on Budget Plan Expected Next Week
Lawmakers are expected to vote on the new budget plan next week, which would pave the way for more budget negotiations before the June deadline.
“We are all committed to delivering an on-time balanced budget and this early action agreement is a critical first step to shrink the state’s shortfall,” Senate President pro Tempore Mike McGuire said in a statement.
Republicans Slam the Plan
Assembly Speaker Robert Rivas called the agreement “the right way” to address the budget deficit. But Republican lawmakers slammed the plan Thursday and said they were shut out of the conversation.
“Our caucus has absolutely nothing to do with it,” Republican Sen. Roger Niello said Thursday. “We learn all of these things later on, at about the same time as our 8 million constituents.”
Unlike the federal government, California law says the state must pass a balanced budget — meaning it can’t spend more money than it has. Newsom will present his revised budget proposal in May, and lawmakers have until June 15 to pass the budget.
RELATED TOPICS:
Will Gov. Newsom Call a Special Session to Deal With Gas Prices?
2 hours ago
Bettors Banking on Eagles Resurgence, Cowboys Regression as NFL Season Begins
13 hours ago
Abandoned Poodle Mix Adam Survives the Wild and Seeks a Forever Home
14 hours ago
Top Brazilian Judge Orders Suspension of X Platform in Brazil Amid Feud With Musk
1 day ago
How a Real Estate Boom Drove Political Corruption in Los Angeles
1 day ago
![Police officers secure the area and investigate the scene of a shooting at Union Square in San Francisco, Saturday, Aug. 31, 2024. (Santiago Mejia/San Francisco Chronicle via AP)](https://gvwire.s3.us-west-1.amazonaws.com/wp-content/uploads/2024/08/31184052/piersall-shooting-1024x683.jpg)
49ers Rookie WR Ricky Pearsall Shot in Attempted Union Square Robbery
![Gov. Gavin Newsom speaks at an event in anticipation of signing a bill on his proposed oil profit penalty plan in Sacramento on March 28, 2023. (CalMatters/ Miguel Gutierrez Jr.)](https://gvwire.s3.us-west-1.amazonaws.com/wp-content/uploads/2024/08/31175839/newsom-big-oil.webp)
Will Gov. Newsom Call a Special Session to Deal With Gas Prices?
![](https://gvwire.s3.us-west-1.amazonaws.com/wp-content/uploads/2024/03/16183042/Eagles-vs-49ers.jpg)
Bettors Banking on Eagles Resurgence, Cowboys Regression as NFL Season Begins
![A black poodle's face with his tongue sticking out](https://gvwire.s3.us-west-1.amazonaws.com/wp-content/uploads/2024/08/29135336/Rescued-from-an-abandoned-home-after-weeks-of-fending-for-himself-Adam-a-shy-but-sweet-poodle-mix-is-now-seeking-a-loving-forever-home.-Mells-Mutts-1024x538.jpg)
Abandoned Poodle Mix Adam Survives the Wild and Seeks a Forever Home
![](https://gvwire.s3.us-west-1.amazonaws.com/wp-content/uploads/2024/08/28091346/082824-Lede-1024x576.jpg)