The move marks a start to months-long negotiations between Gov. Gavin Newsom and state lawmakers over how money should be divided between key programs 鈥� an exercise , and could pose especially tough political questions this go-around as the state stares down after enjoying .
Although the Assembly Democrats鈥� blueprint emphasizes that California is better positioned to weather an economic downturn than it has been in the past 鈥� with $120 billion in available cash across all funds, including $37 billion budgeted in general fund and rainy day fund reserves 鈥� it also adopts some of by the Legislature鈥檚 nonpartisan fiscal advisor. They include:
- Potentially shifting billions of dollars in expenditures to later years, and re-evaluating the timing of one-time spending.
- Considering low-cost borrowing from special funds if California .
- Evaluating the impact of inflation on certain state expenditures. Because the Legislative Analyst鈥檚 Office estimate of a $25 billion budget deficit , actual state costs are likely to be higher than estimated.
鈥淲e have spent a decade preparing for revenue shortfalls, and with the robust General Fund reserves and Rainy Day Fund, California is prepared to weather future economic downturns while still prioritizing the gains that we have made in K-12 and early childhood education, our higher education institutions, homelessness support and health care,鈥� Democratic Assemblymember Phil Ting of San Francisco, who leads his chamber鈥檚 powerful budget committee, .
The next major step in the budget marathon: Newsom releasing his blueprint for the fiscal year beginning July 1, which he鈥檚 slated to do . He will then unveil a revised proposal in May after negotiations with lawmakers and updated revenue estimates. They must reach a spending deal by June 15, though that deadline is squishier than it seems: During the last budget cycle, to keep receiving their paychecks while they worked out final details with Newsom.
Another noteworthy budget priority highlighted by Assembly Democrats: Asking voters in 2024 to weigh in on a ballot measure to 鈥渃raft a modernized Gann Limit 鈥� to encourage building reserves and reducing debts.鈥�
The Gann Limit is that prevents the state from spending more per person than it did in 1978, once adjusted for inflation, and requires it to send the excess money back to schools and taxpayers.
As the economy continues to grow, the Gann Limit will pose an increasingly large problem for state government, 鈥� leaving the Legislature with just two choices: Reduce taxes to reduce revenue growth, or ask voters to change the limit.
is a nonprofit, nonpartisan media venture explaining California policies and politics.