Newsom, lawmakers agree to first $17 billion in cuts

Gov. Gavin Newsom and leaders of the Senate and Assembly announced an agreement Thursday to cut $17 billion from the state budget in April, providing the first details of their plan to begin to tackle California’s massive deficit.

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The plan calls for delaying $1 billion in grant funding for transit and intercity rail projects, saving $762.5 million by pausing hiring for open state jobs and pulling back $500 million from a program to help districts pay for K-12 building projects, among other proposals to trim the shortfall now before additional cuts are made this summer.

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“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.”

The agreement marks a redo of a fumbled budget announcement made last month when Newsom and legislative leaders heralded a premature deal without disclosing an exact amount of funding they intended to cut or detailing a single program that would be affected.

Lawmakers and the governor are scrambling to reduce California’s budget deficit, which Newsom estimated at $37.9 billion in January, before the fiscal forecast is updated in the coming weeks to likely show California in an even deeper budget hole. Estimates from the Legislative Analyst’s Office have suggested the deficit next year could be nearly twice as high as Newsom’s forecast.

Lower than expected revenues, delayed tax deadlines and overspending based on inaccurate budget projections created California’s grim financial picture. The state budget relies heavily on capital gains taxes paid by California’s highest earners, making state revenues subject to volatility in the stock market.

Republicans have criticized the lack of transparency in state budget negotiations and contend Democrats created the fiscal crisis by continuing to fund expensive programs, such as the expansion of Medi-Cal to all low-income immigrants, even as state revenues drop.

Assembly Republican Leader James Gallagher (R-Yuba City) called the budget deal “a swing and a miss from Democrats.”

The first round of cuts could be voted on as early as next Thursday.

Democrats also agreed to pull $12.2 billion from state reserve accounts to cover the shortfall when the final budget is approved later on. The early cuts combined with the planned dip into the reserves will trim $29.5 billion off the deficit.

“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,” said Senate President Pro Tem Mike McGuire (D-Healdsburg).

Because the shortfall this year is so large, Newsom has urged the Legislature to take “early action” to begin to whittle away at the deficit now, long before the June 15 deadline to pass a budget.

The cuts Democrats agreed to make this month are largely considered the easier choices, allowing them to focus on tougher deliberations that will come later on this spring. Reducing the deficit before Newsom unveils his revised budget proposal in May could also lessen the public perception of the state’s fiscal woes by trimming the deficit figure before it is expected to grow.

The struggle to reach a consensus up until this point foreshadows the difficult work ahead in May and June for a Legislature and governor with little experience leading through a fiscal crisis as they weigh challenging choices that affect millions of Californians.

The agreement announced Thursday largely mirrors a plan the Senate put forward weeks ago to “shrink the shortfall” by $17 billion, which aligned with many of Newsom’s proposals to begin to offset the deficit.

The Assembly, where Democrats hold 62 of 80 seats under a new speaker, took a little longer to reach a consensus. This week, the lower house said it pushed back on some of the governor’s proposed cuts to housing and homelessness programs, which were ultimately left out of the early action deal. At the Assembly’s urging, the agreement also authorizes the administration to pause one-time spending from previous budget years that has not yet been dispersed.

Assembly Speaker Robert Rivas (D-Hollister) said his chamber’s approach was the “right way to come at closing such a massive shortfall” and that he expects Newsom “to deliver challenging budget proposals next month to reduce the deficit in the long-term.”

The agreement, according to Newsom and legislative leaders, includes:

Saving $762.5 million by declining to fill vacant state positions.

Cutting $500 million from the School Facility Aid Program, which funds K-12 building projects.

Click here to read the full article in the LA Times

Comments

  1. I have an idea for the legislators and Governor; Why don’t you quit wasting valuable water by sending it to the sea and send it to the farmers south of the Delta who can produce valuable produce and INCOME, which will result in higher taxes collected by the state and an increase in economic activity which will also result in higher taxes collected by the state from suppliers to the Agricultural Industries in California! Farmers will be able to quit fallowing land, and buy more goods and services, pay more employment wages and all of that activity will likely produce income taxes great enough to cover the expected shortfall!

  2. Otis R. Needleman says

    Simply no excuse. Things will get much worse before they get better. And don’t forget about the 800-pound gorilla called the public pension funding shortfalls.

  3. Good idea, Bob. Another one would be stop siphening out of the gas tax, which is for roads and infrastructure, that you put it into your moronic pet projects. The roads and freeways, especially in the Sacramento area, are indescribably HORRABLE!! Another idea would be to DO YOUR CONSTITUTIONAL JOB and balance the budget, each and every year. And yet another would be to let us Californians decide on what projects need and should be performed…….your constant building of bridges and trains to nowhere are imbecilic, to say the least. I’ve got a lot more, however, I know as well as the next common sense individual………ya can’t fix stupid, Right Gavin????

  4. Everyone here made great points! Another would be part time assembly and Sanate. There’s low IQ individuals who run this state need to get real jobs. Obviously when their full time job is to run the state..they can’t do the job. If add up all the cost of these people it’s probably quite a bit of money for very low performance. Most get very generous per deim when in session. Car and State provides the fuel card as well. And lest not forget over a 100k in salary for each one of these winners?? So I think cuts need to be made in their house as well.

  5. A careful audit of duplicate programs would be a good start to find ways that we are wasting taxpayer funds that are needed to run a more efficient government. Surely we can find lots of wasted dollars on programs that no longer are needed. We could also look at how we waste funds on invaders who are here on our streets demanding medical and other services that California taxpayers cannot afford. An across the board cut in everything is also in order. But, are our legislators really serious about any cutting? We will see.

  6. “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,”…

    These Democrats have an amazing ability to make lipstick on a pig look attractive. This is so irrational it has to constitute mental illness. How he and the others can look themselves in the mirror and feel proud is absolutely astounding!

  7. How much would canceling the illegal alien and homeless funding and light rail save?

    Asking for a friend.

  8. Really??? says

    JOKE #1 IS THINKING THIS STATEMENT IS RATIONAL………“We are able to meet this challenge thanks to our responsible fiscal stewardship over the past years, DEM’S are radical Socialists or Communits….they are lying to you to cover their criminal handling of the State Government.

    JOKE #2 IS BEING A DEMOCRAT AND MAKING THIS STATEMENT…..Democrats also agreed to pull $12.2 billion from state reserve accounts to cover the shortfall. If you have not figured it out with this massive fiscal crime there is no reservessssssssss….. You Democrat Idiots spent it irresponsibly

    JOKE #3 THIS IS TELLING YOUR WIFE YOU WILL NOT SPEND ON HIS MISTRESS…..” agreement also authorizes the administration to pause one-time spending from previous budget years…” Sure you Dems…will pause paying because you hope the crap game will produce a winner…..Low IQ idiots call themselves Democrats and don’t get me started on the idiot Jews that the Dem’s keep using but never get it.

    How many laws and ethical misconducts will Dem’s allow before the stat goes belly up? Oh that is right it is already there and you don’t get it.

    Let’s vote for more Shiffties, Slicks, and Weenies….that will stop the inflation that is Dem. caused and bankrupting the middle class.

  9. John Galt says

    I’m guessing that stopping wasting money on the Choo-Choo to nowhere isn’t an option?

  10. This administration is AWFUL..1800 buymyvote. The deficit incliding MASSIVE unfunded pension liabilities (see buy my vote) is almost $500b. Billion. Trailer budget bils. 1 party rule. Executive orders. Utilities. Homelessness.

  11. When one has a deficit of more than $70 Billion, proposing $17 Billion in cuts is a rounding error. Its 24% of the current deficit. Since there are no adults in Sacramento my guess is the hole will continue to get larger. Newsom and the Democrat majority are selling snake oil.

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