It’s time for the folks in California’s Capitol to play let’s-make-a-deal – or actually, many deals.
With scarcely two weeks remaining until the June 15 constitutional deadline for passing a new state budget and less than a month for ballot measures to be finalized for the November election, there are dozens, or even hundreds, of individual issues to be resolved.
Most are to be found in the much-revised 2024-25 budget that Gov. Gavin Newsom unveiled earlier this month.
Acknowledging that the budget had a substantially bigger deficit than he declared in January, Newsom set aside his original strategy of using state reserves and paper maneuvers to avoid major spending reductions. The revised version reduces reliance on reserves and makes billions of dollars in real reductions.
Last week, the Legislature’s budget analyst, Gabe Petek, gave a qualified thumbs-up to the revision for its more realistic approach, even though he still has some differences with the administration on revenue estimates and multi-year deficit projections.
“The May revision puts the state on better fiscal footing and makes substantial progress toward structural balance,” Petek’s office said in an analysis.
Petek had been especially critical of Newsom’s approach to the budget’s largest single item, financial support for public schools, saying it would create problems in future years. The politically powerful California Teachers Association disliked it as well, and aired video ads criticizing it as a major reduction in school support.
The union’s pressure campaign apparently worked because Politico reported Tuesday that Newsom had cut a deal with CTA based on a promise to increase school support by $5.5 billion in future years.
So that’s apparently one deal done. But as Newsom negotiates with legislators on a budget to enact by June 15 – which may not be the final version – he still faces demands from dozens of interests affected by spending cuts that they be rescinded.
Just one of many examples occurred Tuesday, when a coalition of health care and civil rights groups staged a press conference to denounce the revised budget’s elimination of home care services for 1,500 elderly or disabled undocumented immigrants to save $94.7 million.
“It is unacceptable to balance the state’s budget on the backs of the poorest and most vulnerable Californians,” the coalition declared. “Rather than eliminating programs that impact the state’s poorest residents, the advocates will urge the Legislature to consider more progressive solutions to ensure California has the resources needed to care for the most vulnerable Californians.”
Multiply that criticism by 100 or more and it’s the kind of pressure being placed on Newsom and a left-leaning Legislature.
However, the harsh fact is that Newsom faced what he said was a $44.9 billion deficit, mostly because general fund revenues have fallen very short of the $200-plus billion per year that Newsom’s previous budgets had assumed. A chart in the budget pegs the shortfall at $165.1 billion over the four fiscal years beginning in 2022-23 and ending in 2025-26.
As Newsom, legislative leaders and interest groups dicker over the budget, they are also working on potential deals to short-circuit battles over ballot measures.
They are waiting to see whether the state Supreme Court will accept pleas from Newsom and legislative leaders to block a measure that would sharply increase restrictions on new taxes. They are also trying to work out a legislative package on crime that would assuage backers of a ballot measure to overhaul Proposition 47, a 2014 measure that reduced certain criminal penalties.
If there’s a deal before June 27, the pending November measure would be dropped.