Governor Newsom's First Budget
Just three weeks after taking office, Gov. Gavin Newsom has hit the ground running on implementing his plans for his new administration. On Jan. 10, Gov. Newsom submitted his first budget proposal for the 2019-2020 fiscal year to the legislature and held his first budget press conference as governor at the California Secretary of State’s auditorium. This budget proposal, touted by the governor’s office as the “California for All” state budget, gives the legislature and the public a detailed look at Gov. Newsom’s priorities as governor.
The total proposal comes out to $209 billion, which is $8 billion more than former Gov. Jerry Brown’s final budget. Gov. Newsom also topped former Gov. Brown in terms of showmanship. According to CalMatters, Gov. Newsom’s presentation was “three times as long as the typical budget unveiling.” However, to ease the minds of the more fiscally conservative, Gov. Newsom’s office emphasizes that 86 percent of the budget is one-time spending. In other words, his budget does not create many new programs requiring spending beyond this initial payment. Gov. Newsom’s budget allocates more than $13 billion to pay off the state’s budget debt, build an emergency reserve fund, and pay down retirement pensions. His fiscal restraint has even earned the praise of some of the Republican opposition in the Assembly. Assembly Republican leader Marie Waldron, to the San Francisco Chronicle, said “I applaud the governor’s decision to increase our reserves and pay down a portion of the state’s wall of debt.”
Although Gov. Newsom’s budget includes some fiscally conservative proposals, this does not mean that Gov. Newsom failed to deliver on some of his bolder ideas he presented while campaigning. Newsom’s budget includes $80.7 billion for K-12 education, close to double of the funding during the financial crisis eight years ago. Gov. Newsom also delivers for higher education. His proposal would pay for two years of tuition for every full-time community college student and also increases funding by $500 million for the UC and CSU systems, contingent on no increase to tuition rates. Boosting funding for higher education was a significant issue on the campaign trail for Gov. Newsom. He wrote, in response to a questionnaire from the education news blog EdSource, “It has been nothing less than devastating to watch the state’s disinvestment from public higher education, and with it, stripping a generation of Californians of an opportunity those before them enjoyed.”
Another issue tackled by Gov. Newsom’s budget is the housing crisis. Gov. Newsom proposed quintupling the funding for the low-income housing tax credit program from $80 million to $500 million. Furthermore, Gov. Newsom offers a total of $500 billion to local governments to fight homelessness but also introduces a powerful new incentive for local governments to meet their housing quotas: reach the quota or lose transportation funding. The California State Association of Counties quickly came out against this proposal. In particular, the disadvantaged communities of the Central Valley have a lot to lose with the proposal. According to Citylab, “virtually no cities or unincorporated county areas [in the Central Valley] are meeting housing goals.” However, despite the anger from some local governments, Mayor Eric Garcetti of Los Angeles and Mayor London Breed of San Francisco both came out in favor of the proposal. Although his budget proposes significant investments in housing, it remains to be seen whether the Governor will reach his overly ambitious goal of 3.5 million new homes in the state by 2025, as a recent study by the think tank Smart Cities Prevail found that to reach that goal, California would need 200,000 more construction workers.
In addition to education and housing, Gov. Newsom advances his health care agenda in his first budget. He provides $194 million to expand health care coverage for undocumented adults up to age 25. Currently, California provides healthcare coverage for documented children up to age 19. He also proposes expanding eligibility for subsidies for participants in Covered California, from a cap of $48,000 for individual income to $75,000 for individual income and $150,000 for joint income for families. This subsidy would be funded by implementing an individual insurance mandate, essentially reimplementing the individual mandate of the Affordable Care Act that was repealed by President Trump’s Tax Cuts and Jobs Act of 2017 except on the statewide level. While expanding access to healthcare, this budget does not include anything regarding the implementation of a single-payer healthcare system, an idea Gov. Newsom supported as a candidate for governor. While on the campaign trail, Newsom floated the idea of implementing single payer, saying, “There’s no reason to wait around on universal healthcare and single-payer in California.”
Other popular initiatives include $121 million for improved firefighting aircraft and accepting credit cards at Department of Motor Vehicles offices. Overall, Gov. Newsom’s first budget tackles the issues raised by his campaign for governor. However, his budget seems cautious considering his 60 percent plus victory in the gubernatorial election and a Democratic two-thirds supermajority in both houses of the state legislature. This budget seems to signal that Gov. Newsom is trying to strike a balance between the progressive vision he offered during the campaign and the realities of governing a state with the fifth largest economy in the world. Only time will tell whether the Governor will be able to accomplish his ultimate, ambitious goal of “making the California Dream more accessible and affordable for all.”