Legislative Leaders Counter On California Budget Deficit

Amid ongoing budget negotiations, legislative leaders today released their counter proposal to a recent plan by Gov. Gavin Newsom to close California’s projected multibillion-dollar deficit.

The legislative proposal rejects some of the major spending cuts that Newsom is seeking, including to college scholarships for middle-income students, public health programs, subsidized child care slots and housing development, while pushing for more substantial reductions to prison funding.

But it aligns with the governor’s approach of minimizing the use of reserve accounts next year, as California faces a revenue shortfall that is expected to continue for several more years beyond that, and suggests doubling the size of the state’s rainy-day fund over time.

The legislative plan, an agreement between Democratic leaders in the Senate and Assembly, also endorses Newsom’s ideas of creating a temporary holding account for future projected budget surpluses until the money actually materializes.

The Legislature has a few weeks left to reach a deal with Newsom, as it approaches a June 15 deadline to pass a balanced budget or lose its pay and the July 1 start of the fiscal year. After lawmakers and the governor took early action last month, finance officials project the remaining shortfall to be more than $27 billion next year.

Assembly Speaker Robert Rivas, a Salinas Democrat, said in a statement that the Legislature’s proposal is “focused on preserving programs that matter most to Californians: lowering the cost of living, expanding affordable housing access and sustaining public services.”