Gov. Newsom Unveils $227 Billion State Budget Proposal with EDD Fraud Unaddressed

On Friday Governor Gavin Newsom unveiled his 2021-2022 state budget proposal, totaling for a grand total of $227 billion.

According to Governor Newsom, his proposal focuses on five urgent areas for California: COVID-19 vaccinations, reopening schools statewide, wildfire preparation, giving additional financial support to citizens in need, and additional support for small businesses.

During the week, the Governor had given previews of parts of his budget. This included the $2.4 billion earmarked to give $600 stimulus payments for those who make under $30,000 a year, as well as an extension of eviction moratoriums statewide.

Also previously addressed by Newsom was COVID-19 funding; $4.4 billion will be set aside, including $2 billion for testing, $473 million for contact tracing and $372 million for vaccines and vaccine distribution. The $4.4 billion would also not completely come from California taxpayers, as the federal government is expected to cover at least some of the costs.

By far the largest part of the budget is education, with Newsom calling for a record $85.5 billion of spending, roughly 40% of the entire budget. While some of the increased budget for schools will be going to helping them transition back to in-person classes, of which $2 billion is earmarked for, other funds will go to more broad categories. For example, $4.6 billion alone will go towards helping students “bounce back from the pandemic,” with over $300 million going to “educator development” and $400 million being proposed for mental health based services in schools.

“We must do that in order to safely reopen for in-person instruction in our schools, to reopen our small businesses as well as businesses large and small all across the state of California,” noted the Governor of the large education budget ever.

Homelessness-related issues will see $1.7 billion in funding, including an expansion of the previously failed Project Roomkey and Project Homekey plans. Other critical Californian issues were also addressed with bumps in funding, including $1 billion to helping fight wildfires and several billion going to helping small businesses with grants and loans.

Newsom pet projects also saw increases in funding, including $1.5 billion going to helping expand his electric car plan for California, including making electric cars easier to buy and building more electric car charging stations across the state.

However, large chunks of the budget would also not immediately be spent, by law. The state Legislative Analyst estimates that the state would be getting $26 billion more than expected, largely due to new Californian taxation policy taxing richer Californians more than in previous years, and many people who remained employed during the year being from the higher tax brackets. While that number will likely plummet in coming years due to wealthier Californians leaving the state for lower tax areas, the number is expected to hold firm for 2021-2022.

This spurred Governor Newsom, by law, to set aside $4.5 billon to California’s reserve fund. That “rainy day” fund will now climb to $16 billion, with reserves moving up to $22 billion. State workers will also see a benefit to the new budget, with all state worker pay cuts being lifted under the proposal when the new budget comes into effect in July should the proposal remain intact.

“I am proud to advance a budget that will support and expedite our recovery from the health and economic crisis caused by COVID-19 so that our state comes back stronger than before,” stated Newsom of his budget proposal. “Taken together, these proposals help us tackle the challenges we faced as a state before, during, and through the pandemic.”

Senators, Assemblymembers polarized by Newsom’s proposal

Lawmakers have been polarized by his budget proposal.

Some, such as Assemblyman Marc Berman (D-Menlo Park), praised the budget for addressing all of the crises currently hurting the state and putting more money towards education.

“Governor Newsom’s budget proposal offers hope and a path to recovery from the COVID-19 pandemic and the devastating impact it has had on our communities,” said Assemblyman Berman on Friday. “Foundational to that is our ability to vaccinate California’s large and diverse population, safely reopen schools for in-person learning, and support job creation and small business recovery. I applaud Governor Newsom’s commitment of $372 million for vaccine distribution, a record $85.8 billion for K-14 education, including substantial funding dedicated to addressing learning loss and equity, and $575 million for grants and nearly $71 million in fee waivers for small business.

“I am particularly appreciative of Governor Newsom’s commitment to supporting the basic needs of college students, proposing $100 million in one-time funding for community colleges, $30 million ongoing for CSUs, and $15 million ongoing for UCs to address housing and food insecurity, mental health, and digital equity. I have heard from hundreds of students across California about their struggles to meet their basic needs, and I’ve championed legislation aimed at easing the burden for our most vulnerable students.

“I look forward to working with Governor Newsom and my colleagues in the Legislature to provide immediate relief to Californians struggling from the COVID-19 pandemic and approving a budget that reflects the values and needs of our great state.”

Others, however, were highly critical of the budget, noting that huge issues such as the $2 billion EDD fraud case, affordable housing, and having a reopening plan were not addressed and that much of the money seemed misappropriated.

“California is in complete disarray under Governor Newsom’s management of the 2020 COVID crisis,” said Senator Melissa Melendez (R- Lake Elsinore) on Friday. “His recently released budget provides no help to fix the EDD disaster where billions of dollars in unemployment have found their way into the hands of fraudsters. This budget provides no reopening plan nor the necessary relief for small businesses; it provides no successful roadmap to alleviate the growing housing, homelessness and mental health crises; and it provides no actionable help to the millions of school aged children who are falling behind academically.  Now is not the time to spend taxpayer dollars on fantasyland narratives when so many everyday Californians are struggling to make ends meet.”

The legislature is due to convene soon on the budget and is expected to pass the state budget earlier this year than normal because of the urgency of COVID-19 relief and other related proposals in his budget plan.