Budget Implications

Knowledge+Partnership is Power! Governor’s Budget, What?

What are the implications to the Governor's Budget for future budgets? 

On January 10, 2024, Governor Gavin Newsom announced a $291B budget plan with a $37.9B deficit to the California legislature.  

Newsom’s new budget comes out to $291 billion which is significantly smaller than the $310.8 billion budget he signed into law last year. The new proposal includes $208 billion general fund, the part of the budget over which he and lawmakers generally have the most control.  With the recent stock market declines and delayed tax collections last year because of the intense winter storms now making landfall in California, Newsom and lawmakers have been tasked with the problem of reducing state spending to balance the budget.  

To achieve that, Newsom wants to withdraw $13 billion from the state reserve accounts. He also plans to cut $8.5 billion ranging from nearly $3 billion from climate programs, $1.2 billion in housing programs, $760 million from currently vacant state jobs, and about half a billion for school facilities and student housing. Proposing these budget cuts would backtrack previously proposed spending including $ 1 billion for transit and intercity rail, half a billion dollars in early education facilities, and $400 million in clean energy spending.  

Healthcare: 

The withdrawal of $13 billion from the state safety net reserve is the most alarming in Governor Newsom's budget cuts. The state reserve is intended to be used to maintain benefits for Cal-works and Medi-Cal. The significance of these cuts heavily targets families, low-income communities, and communities of color. The proposed cuts to CalWORKs would cut Family Stabilization and Expanded Subsidized Employment services. This program serves families in crisis and parents who help parents find adequate jobs. Also, the governor proposed withdrawing the reserve fund which holds $900 million dedicated to serve as a safety net during an economic crisis. Effective January 2024, all Californians with incomes below 138% of FPL are eligible for Medi-Cal regardless of immigration status. Covered California maintains that affordability measures by including $82.5 million in 2023-24 and $165 million annually to support financial assistance for individuals purchasing coverage. There will now be an elimination of deductibles and a reduction in copayments and other healthcare cost-sharing for more than 600,000 Californians.  

Housing:  

The Govenor's proposed budget takes a sharp cut to the housing crisis in California. Since the COVID-19 pandemic, affordable and accessible housing for black and brown communities of low-income have been increasingly hard to find. The governor's proposed budget takes a sharp cut to the housing crisis in California by cutting $1.2 billion across various housing programs:  

• Infill Infrastructure Grant Program: A reversion of $200 million General Fund. 

• Housing Navigators: A reduction of $13.7 million general fund ongoing for housing navigators.  

• Veteran Housing and Homelessness Prevention Program: A reversion of $50 million general fund.  

• Multifamily Housing Program: A reversion of $250 million general fund. 

• Regional Early Action Planning Grants 2.0: A reversion of $300 million general fund.  

• CalHome Program: A reversion of $152.5. million general fund. 

• Multifamily Housing Program: A reversion of $250 million general fund.  

With these cuts totaling $1.2 billion, the governor has also funded homelessness encampments sweeps which further displaces communities rather than providing housing.  

There are numerous cuts in Newsom’s budget plan that will disproportionately affect communities of color and low-income families. If the governor continues to make drastic cuts to crucial programs, then the stability of those programs is threatened. However, it is important to note that these are proposed budgets which means they could change in the upcoming months.