In summary
The Legislature passes a placeholder state budget, but must still negotiate with Gov. Newsom on the final deal. How the state spends taxpayer money is largely being decided out of public view.
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After legislative leaders failed to reach an agreement with Gov. Gavin Newsom about how to close California’s projected multibillion-dollar deficit, the Legislature passed a placeholder state budget today, just ahead of a mandatory deadline.
With only a few weeks left until the start of the new fiscal year on July 1, both sides refuse to publicly discuss what specific issues are holding up a deal.
Newsom’s office and his Department of Finance declined to answer questions about the remaining differences with the Legislature that still need to be worked out. Representatives for Senate President Pro Tem Mike McGuire and Assembly Speaker Robert Rivas, who are in charge of negotiating with the governor, would not make them available to the media today after their members approved a spending plan that almost certainly will not be the actual budget.
“There’s a shared set of priorities,” Assemblymember Jesse Gabriel, an Encino Democrat who leads the Assembly budget committee, told reporters following the vote. “It’s more about what are the most effective solutions, what are the programs and services that we think are the best way to go forward versus others.”
His counterpart on the Senate budget committee — Sen. Scott Wiener, a San Francisco Democrat — did not respond to an interview request.
Newsom presented a plan last month to address what his administration estimates is a remaining funding shortfall of $56 billion over the next two years, including by dipping into reserve accounts, deferring school funding, eliminating government jobs and cutting or delaying money for infrastructure, health and climate programs.
Democratic leaders in the Legislature, where the party holds supermajorities in both houses, released a counterproposal a few weeks later. Among the major discrepancies is a push for more substantial reductions to prison funding to reverse some of Newsom’s proposed cuts to college scholarships for middle-income students, public health programs, subsidized child care slots and housing development.
The governor and the Legislature must also decide whether to repurpose billions of dollars that were earmarked to increase payments for health care providers who treat low-income patients, as Newsom has suggested, and whether to further delay minimum wage increases for health care workers, which could potentially save the state billions of dollars but faces strong opposition from unions.
Gabriel defended the process as “exceptionally transparent,” pointing to dozens of legislative budget hearings in which he said “there’s been a very public vetting of these issues” and “opportunities for Californians to weigh in.” He said he did not think any of the final solutions would come as a surprise.
“I think Californians have a good understanding of what the major issues are that are at stake in this process,” he said.
Despite ongoing negotiations over undisclosed provisions, Democratic lawmakers voted today to adopt their version of the spending plan because they must pass a balanced budget by midnight Saturday in order to get paid. The bill passed by a vote of 29-8 in the Senate and 59-14 in the Assembly, along largely partisan lines.
Republicans criticized the proposal as out of touch with Californians’ needs. They raised objections to provisions pausing some tax deductions for businesses to raise additional revenue and reversing previous commitments on expanded health care spending. Several members called out the inclusion of billions of dollars for the state’s troubled high-speed rail project and to expand health care access for undocumented immigrants while other programs are cut.
“This is a shameful budget,” Assemblymember Kate Sanchez, a Rancho Santa Margarita Republican, said during floor debate. “This budget is heartless, it’s divisive and it’s completely detached from the reality and the struggles that Californians are actually facing.”
