On Monday, the California Legislature approved a state budget plan only hours before the June 15th deadline that would have had lawmakers forfeit their pay.
A new budget plan from the Legislature
The approved budget largely followed their proposal made earlier this month and rejected the Governor’s plan of $6.1 billion in cuts in favor of increasing some spending and depending on anticipated federal money this fall.
Governor Newsom has worked the legislature over many of the cuts already, dropping some medicare and child care program cuts designed to save over a combined $100 million and adding a temporary tax on businesses that is expected to generate $4.4 billion for the state However, despite the approval and ongoing talks Monday, many more cuts and spending increases need to be negotiated.
The legislature budget amount of $107.9 billion for K-12 education has been one of the main points of contention to Newsom’s plan, which includes cuts across the board, including 10% to state colleges and universities. How this would all be paid for is a major sticking point for both sides. While Newsom’s plan relies on cuts, which would lead to school closings and teacher layoffs, the legislature’s plan calls for billions of deferred payments to school districts, forcing many to take out short term loans before the money arrives.
The question of health care will also have to be negotiated, with increased medicaid funding, stoppage of plans for illegal immigrant medicaid, over $1 billion in Medi-Cal expansions and coverage, and continuation of funding for food and nutritional programs clashing in the state budget proposals.
Millions in environmental grants, nearly $2 billion in homeless and low income housing assistance, the closure of the Barstow Veterans Home, expansion of California Earned Income Tax Credits for children of illegal immigrants, and increased small business financial assistance are among the other more contentious topics between the two budgets.
With tens of billions are now on the line for the 2020-2021 budget and California, which is currently has a $54.3 billion budget deficit, both lawmakers and Governor Gavin Newsom have announced that negotiations are ongoing but moving forward.
“I’m very pleased at the conversations we’ve been having,” Newsom stated during a news conference on Monday. “I’m not going to say anything publicly that puts any of those conversations at risk.”
GOP Legislators stand against new budget plan
But Monday’s budget announcement also showed a wide split not only between the Governor and the Legislature, but also within the Legislature itself. Senate Republicans such as Senator Jim Nielsen (R-Tehama) have said that the Senate budget does not solve any financial issues and may lead to another deficit.
“We have no idea where the rest of this budget is going to go. Yet we’re voting for more revenue to start the whole debate,” said Senator Nielsen on Monday. “My fear is, as usual, that will be revenue that goes down a dark hole (and) in another year we’ll be on the precipice of another deficit.”
In a latter press release, Senator Nielsen added “This budget does not solve the state’s financial problems. It prolongs the crisis, thereby, delaying and deepening the economic pain for Californians, especially those in need of state services.
Employers – especially small businesses – have had to bear the brunt of this pandemic. Businesses are finally re-opening, many at limited capacity. Under this budget, there is another $4 billion in taxes heaped upon them for next year. How can they afford to stay open?”
Other Senate Republicans agreed with Senator Nielsen.
“Today’s budget vote was a sham. It is window dressing at best because it is a budget that can be dramatically amended in the next few days. Democrat legislators are still struggling to get Governor Newsom’s approval of excessive spending and tax increases that they are promoting,” said Senator Patricia Bates (R-Laguna Niguel) in a statement.
“The budget we voted on has a $9 billion tax increase on California businesses at a time when many are struggling to keep their doors open and keep their workers employed. Despite a huge deficit, this budget will spend more than $20 million to enforce AB 5, which will further hurt many workers who wish to be their own bosses.
As I have said before, Californians have tightened their belts and the state must do the same in a way that protects core priorities. I hope whatever budget deal the Governor agrees to in the near future will be better than the one we voted on today.”
Democrats favor larger budget because of coronavirus, economic concerns
Senate Democrats opposed GOP concerns, citing the need for the continuation of state services and the expansion of some services to help people during the coronavirus pandemic and current economic crisis.
“Given the state’s current economic shortfall and sobering revenue projections, my colleagues and I approved a budget that allows for continued state programs and services while setting the stage for continued budget deliberations in the next two months,” said Assemblywoman Tasha Boerner Horvath (D-Encinitas) in a press release. ” This budget relies on federal relief and uses state reserves to avoid reducing vital state services for families, who now more than ever need the support to stay afloat during uncertain economic times.
While the state still faces many challenges, this budget continues support for K-12 education and colleges and universities. As a mother and businesswoman, I think it is critical that we protect funding for education, childcare and after school programs. Parents, especially moms, cannot fully go back to work when our kids are not in school five days a week.
This budget also protects vital health and human services programs, and increases support for housing the homeless. We are in the middle of a pandemic and it is our job to protect our most vulnerable, including our seniors. So cuts to Medi-Cal, community clinics, hospitals, and our healthcare and in-home care workers should rightly be off the table.”
Legislature Democrats also promised to stand their ground in the coming negotiations.
“While there will be changes to reflect the final agreement, we will not deviate from the principles we have outlined in this budget,” said Senator Toni Atkins (D-San Diego).
With negotiations now taking place, both sides will now have until July 1st, the beginning of the fiscal year, to agree on a budget.