Newsom’s unbalanced CA budget faces opposition to cuts

from Dan WaltersCalMatters

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Gavin Newsom is trying to end his governorship on a high note, claiming he has written a “structurally balanced 18-month budget” that will give his successor some breathing room.

The word “structural” is the key feature Newsom is touting because over the past four years, since he and the Legislature increased spending on a falsely expansionary revenue projection, budgets have spent a total of $125 billion more than the state’s actual revenue, according to the Legislature’s budget analyst, Gabe Petek.

That’s right what budget junkies call a “structural deficit” meaning that expenditure commitments are more than the revenue system can cover. Newsom now claims that with the recent surge in revenue and some belt-tightening, his 2026-27 budget is now structurally sound.

However, the numbers he presents say otherwise.

His A budget of $349.4 trillion projects the state will take in $226.5 billion in general fund tax revenue in the fiscal year that begins July 1 but spend $246.6 billion, a $20 billion difference that is slightly smaller than in recent years but still a structural deficit.

A short-term surge in revenue, some spending cuts, some borrowing and the usual mix of other “solutions” would cover the shortfall, but even so, the budget acknowledges that long-term deficits still loom, though perhaps smaller than previously estimated.

Petek says the budget still leaves the country “ill-prepared” for even a small hick in revenue.

Newsom is clearly proud of what he’s accomplished, saying “We cut deficits, but not corners.” However, as the June 15 constitutional deadline for a budget approaches, he and lawmakers face widespread opposition to budget cuts, particularly in education and health and social services for the poor and disabled, and reluctance to cover additional cuts in federal aid to those programs.

Hardly a day goes by without a demonstration or other event organized by advocates to pressure Capitol Hill politicians to make their agendas whole. And more pressure is coming from powerful education groups because Newsom is withholding some school funds that the constitution requires to be paid out.

Last week, for example, the California School Boards Association and a coalition of school unions and other education groups staged a rally on the steps of the Capitol, urging Newsom and lawmakers to give schools their designated state aid, reminding them that it’s “a matter of law, not a proposal that can be dropped when it becomes inconvenient for politicians,” as school board President Debra Schade said.

“However, for the third year in a row, the administration is proposing to manipulate the Proposition 98 minimum funding guarantee instead of fully complying with it. By opening the door to the idea that Proposition 98 can be manipulated whenever the state faces fiscal pressure, we fundamentally weaken the protections that voters intentionally put in place for California students.”

Health care advocates are just as adamant. For example, advocates for dental care for poor children released a report saying “More than 1.2 million low-income California children could lose access to dental health care if Gov. Gavin Newsom’s proposed Medi-Cal dental cuts are enacted.”

Meanwhile, supporters of Newsom’s preschool and child care expansion complained that “the governor is cutting all child care and early childhood programs by 2 percent in real spending,” adding, “After protecting young children, supporting the family for several years, the governor’s reversal is strange … in light of his presidential ambitions.”

The Democratic supermajority in the legislature is clearly sympathetic to the grievances flooding their offices, even to the extent of raising taxes. However, Newsom also doesn’t want to leave after imposing a large tax increase.

We’ll soon learn whether lawmakers will anger defenders of the programs they proudly supported to support a lame-duck governor who’s clearly plotting for the White House.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.