Gov. Newsom Touts Largest Tax Revenue Windfall in CA History in Budget, and Highest Spending

“The state is flush, but school districts aren’t. Why isn’t the state allocating more to the kids, cities and counties that are still having a difficult time?”  – Sen. John Moorlach

Gov. Gavin Newsom released his revised budget Thursday, highlighting the largest tax revenue windfall in California history. However, Newsom’s $214 billion budget is also a record in California history, up from his $209 billion budget proposal in January.

Some are saying “Newsom is boosting spending in some key areas, but his new budget is unchanged in many ways from January.” Nearly 87 percent of the governor’s new spending is one-time “investments,” as the California Globe reported in January.

California’s CalPers, CalStrs and the State health plan have a total of $1.2 trillion in unfunded liabilities, more than 10 percent of the national debt. 

When Gov. Jerry Brown returned to office in 2011, his state budget was $98 billion, and increased to $200 billion by 2018 — a 110 percent increase in eight years, with a population increase of just three million. In just five months, Newsom has increased the state budget $5 billion – even with a tax revenue windfall.

Of that $21.5 billion in windfall tax revenue, $3 billion will be set aside in the “rainy day” reserve.

Gov. Newsom noted in his revised budget:

“Moves the state closer towards health care for all & single payer: The budget proposal maintains a number of the Governor’s budget priorities from January and moves the state toward health care for all while the state gears up for single payer. The Governor proposes making California the first state to expand Medi-Cal coverage eligibility to young adults ages 19 through 25 regardless of immigration status. The budget also proposes first-in-the-nation subsidies for middle-income earners to be able to purchase health care on the Covered California exchanges.”

Newsom is still pushing a new tax on drinking water, and plans to fine Californians who don’t buy health insurance, as the Globe reported in January. “It’s time for the individual mandate,” Newsom said. “The President is wrong, and California is right,” he said referring to Congress overturning the individual mandate in the Affordable Care Act, because it penalized people with a fine for not having health insurance.

Yet even with the tax revenue windfall, legislative Democrats have proposed many tax-increases. “California families are taxed too much,” said Senate Minority Leader Shannon Grove. “Our families already face a tax on air and a gas tax that is the second highest in the nation. Yet, this updated budget proposal wants to tax them an additional $2.4 billion.”

“The state budget is flush with billions in surplus revenue. Twenty-one billion dollars ($21 billion), to be exact,” said Sen. Jim Nielsen. “But that’s not enough for some in the majority party. They want more. They want to raise taxes on water, fertilizer, dairy, tires, guns and businesses.” Nielsen wants to know “Why does the state need to raise taxes when there’s $21 billion in surplus? They are spending their way into another crushing deficit that will harm the poor, blind and disabled, and squeeze the middle class once again.”

“Haven’t we learned from Gray Davis’ spending spree – and subsequent crash – two decades ago?”                        – Sen. Jim Nielsen

Grove noted that California’s budget surplus is more than four times Nevada’s annual budget.

“The Governor’s desire for new taxes despite an estimated $21.5 billion budget surplus is unfortunate, unhelpful, and unnecessary,” said Sen. Patricia Bates (R-Laguna Niguel). “For example, adding another tax to water bills increases the cost-of-living for families facing poverty.”

Both Grove and Bates noted Newsom’s budget includes more funding to help low-income families, and $330 million for the developmentally disabled community. “That should be just the beginning,” said Grove, after years of repeated cuts.

Of Newsom’s new budget spending, his “parents agenda,” which includes proposals to stop taxing tampons and diapers, and  revenue from legal marijuana sales for additional child care programs for low-income and lower to middle class families. This amounts to more than $130 million of new spending.

Some interesting Twitter thoughts on the Gov’s budget

@MattShupePR : Only in #California would the state’s largest budget in history be considered frugal.

@latimes: Gov. Gavin Newsom proposed to add $168 million to the budget of the California Department of Motor Vehicles for more hiring and improvements to keep reducing wait times and lines at field offices that ran up to 6 hours last summer.

Assemblywoman @BuffyWicks: BIG NEWS! Very excited to announce that Governor @GavinNewsom‘s #MayRevise budget, includes $27M for #CalVIP! That’s an increase of 300% from the previous $9M. That means $18M more going to Gun Violence Prevention & Intervention Programs in California — programs we know work!

CA Senate GOP Caucus‏: Is there no end to California Democrats thirst for taxes and fees? With growing homelessness, increased poverty, record revenues, and $20b budget surplus, Gov. Newsom proposes billions in news taxes & fees.