Assembly Approves 2020-2021 State Budget of $202.1 billion

On Friday, the California State Assembly approved the $202.1 billion 2020-2021 state budget 57-16, one day after being approved by the Senate.

Final approval in Sacramento

The budget, which had to bridge a $54.3 billion deficit gap, will include many cuts, increased taxes, delayed public school payments, depends significantly on using rainy day funds from state coffers, and on federal HEROES Act assistance which has not yet been passed in Washington.

Public schools were largely spared due to raised taxes on high-profit businesses, differing significantly from Governor Gavin Newsom’s original tax plan which called for cuts. But schools will not get money immediately, as deferred payments were kept in the budget, forcing many schools districts and counties to possibly take out loans to tide them over until funds are released. Health care cuts were also avoided, a compromise between Newsom’s original plans on cuts and the legislature’s original plan on expanding health care to those in the state.

However, many cuts were kept from earlier versions on the contingency that federal HEROES funds are not approved. Across the board state employee pay cuts by 10% were approved, amounting to a total of $2.8 billion. The California State University and University of California systems will also see 10% cuts amounting to $1.7 billion. Courts, housing programs, social programs, and others would also see cuts without federal assistance.

Funding was allocated to a few programs: Illegal immigrants making a low amount of money who have children 5 or under will now be given a credit for a higher state refund, while $10 million will go to “entrepreneur micro-grants for illegal immigrants” to assist businesses owned by illegal immigrants.

Both programs received a grilling from GOP lawmakers, but were eventually approved due to the low amounts of funding.

Due to the HEROES Act funding situation not being known until later in the year, many sectors hurting due to the economic downturn, many other sectors being affected by the coronavirus pandemic, and many state funds being spent or payments being delayed through executive orders by the Governor earlier this year, many legislators  were reluctant  to cut too much in certain parts of the budget due to the public need.

“We could have made more cuts,” said Assemblyman Phil Ting (D-San Francisco). “We could have had a budget that was better for our bond rating. But we decided that it was more important to ensure that schools remain held harmless, more important to make sure we didn’t cut health care.”

Republican backlash against the budget

However, many Assembly members opposed to the budget were concerned about the budget only delaying cuts for another year due to the deficit, and not expected to be made up by next year. GOP also expressed concerns over rushing the budget to meet the July 1st fiscal year due date.

“This budget only delays the inevitable,” noted Assemblyman Vince Fong (R-Bakersfield). “We will have to come back again and plug another budget deficit because we didn’t do what we were supposed to do.”

Concern over the timing was also brought up.

“The reason we have a legislative process is so we can have those debates in a public forum, and we’re not doing that here,” added Assemblyman Jay Obernolte (R-Big Bear). “We’re rushing through this.”

Other observers noted the lack of flexibility in the budget.

“Coronavirus and the economy, and who knows what else we’ll see this year, are ever changing things,” said municipal budget advisor David Klein. “The budget should have really been shaped more around that. But it’s set now for the most part.”

“We have emergency funding, but we better hope something else big doesn’t come along or that budget will suddenly be seeing another crater in it.”

Despite the notable GOP opposition, the budget was still passed by a 41 margin of votes in the Assembly. With Governor approval, the budget is on pace to meet its July 1st deadline.