GOVERNOR’S BUDGET – HOW TIMES HAVE CHANGED
Just a few days after Governor Gavin Newsom officially started his second term in office at a well-attended inauguration ceremony on the West Steps of California’s Capitol, kicked-off by a walk across Sacramento’s Tower Bridge, his office released a budget plan that will set the priorities for his oncoming term and deal with a downturn in the economy.
After years of historic surpluses, for the first time during his Governorship the state is projecting a deficit - $22.5 billion - in 2023 that will continue to grow in coming years.
Despite the in-the-red-projections we applaud the Governor for trying to deliver on a budget – and some recent promises - without raising taxes and focusing on one-time expenditures. Although the state’s revenues remain too vulnerable to the whims of the economy and a progressive tax system, this budget makes some sober choices to deal with that.
On the positive side the Governor’s budget continues to deliver on the “Real Public Safety Plan,” which includes more than a half-billion dollars over three years to fund the Organized Retail Crime Task Forces and help local law enforcement combat retail theft and other related crimes.
The Governor continues to fund critical infrastructure projects that are needed to strengthen the state’s supply chain, though we continue to call for more investment to enable the use of alternative fuels for the heavy transportation sector to help meet the Governor’s aggressive GHG targets. However, some key port and infrastructure projects will be delayed by spreading the funds over multiple years.
The California Competes Tax Credit meant to keep businesses in the state gets a one-time allocation of $120 million expanding the program again.
The budget provides funding of $250 million for Small Business and Nonprofits COVID-19 Supplemental Sick Leave, which will help many of our tenants stay in place.
Finally, the budget includes ongoing funding to address the out-of-control homeless issue in the state and a related crisis, funding to address the fentanyl crisis which is killing so many people across the state.
Although there are no new major taxes, there are several areas of concern in the proposal which will increase the cost of living and cost of doing business in the state, which includes an oil “windfall profits tax proposal” which will increase the cost of fuel for drivers and consumer goods and reduce jobs in the state.
The Governor is also suggesting a reduction in debt payments to state’s Unemployment Insurance Fund, which will shift the cost burden to employers.
Finally, the Governor is suggesting that monies from special funds be used to support the General Fund – this tactic has been utilized in the past and the funds have not been backfilled which ultimately shifts the burden onto businesses and consumers to back fill these “loans.”
More detailed summaries and links to the full spending plan can be found here.