Gov. Gavin Newsom unveiled his proposed budget for the next fiscal year on Wednesday. His administration is projecting a much smaller shortfall than what the Legislative Analyst’s Office predicted — $37.9 billion versus $68 billion.
With a deficit still looming, Newsom says he will declare a budget emergency in California. That will allow the state to tap into its rainy-day fund.
While Newsom’s blueprint contains cuts, it’s also heavy on spending deferrals. Some of these will hit local governments. Newsom’s plan calls for delaying $260 million for cities and counties to address homelessness. Another $300 million investment in mental health infrastructure would be delayed. He has also proposed cutting more than $1.2 billion from housing programs. Climate change investments are taking an even greater hit ($3 billion).
Overall, the $291-billion spending plan shakes out this way:
Withdrawal of $13 billion from reserves
$8.5 billion in spending cuts
$7.2 billion in delayed or deferred spending
“We are pleased that, as both the state and many cities face a budget deficit, the state is honoring previous commitments to shared state and local priorities,” said League of California Cities Executive Director and CEO Carolyn Coleman in a statement. “As the crisis of homelessness, affordable housing, mental health, and addiction has accelerated, cities have substantially stepped up their efforts and spending to support and protect their most vulnerable residents. We welcome the Governor’s commitment to working closely with the Legislature on additional, ongoing funding to support local governments’ response to the homelessness crisis.
However, we can’t afford to defer or delay putting roofs over the heads of all Californians. We are concerned about the roughly $1 billion in proposed cuts to key housing programs. Cities stand firm in our call for an ongoing investment in affordable housing as an integral part of the solution to homelessness. Cities welcome a collaborative approach and partnership to delivering real solutions that serve all Californians as together we weather this economic uncertainty.”
The California State Association of Counties largely praised the Newsom administration for “a cautious and measured” use of reserves to address the shortfall. The statement did not directly address the proposed cuts or spending deferrals. Read the statement here.