Government Gavin Newsom on Friday sent a budget to the California legislature calling for a swift and extensive boost in the state government’s response to the COVID-19 pandemic, which brings much of an unintended tax revenue to workers and help enterprises, boost public health and speed up the reopening of public school classrooms.
In total, the proposal contributes more than $ 14 billion to a variety of coronavirus initiatives, while setting aside money for virus vaccination efforts and nearly $ 3 billion in short-term cash reserves if additional needs arise. Newsom has urged lawmakers to act by the end of the month on the most pressing issues – including an extension of the state’s moratorium on evictions and funding for the COVID-19 vaccination system in California.
“We can not wait,” Newsom said during a lengthy budget presentation in Sacramento. “In this area you can not wait.”
The centerpiece of the governor’s economic stimulus plan – a $ 4.5 billion blueprint announced Wednesday – would provide cash infusions to existing government programs that provide tax credits to businesses and apprenticeship programs to community colleges. Money would also be used to speed up housing construction in urban and rural areas, and subsidies for low-income residents to buy cars and trucks with exemptions. An additional $ 500 million would be available for tax credits to encourage the creation of additional low-income California housing.
“This is an incredible moment in terms of anxiety, but an incredible moment of opportunity to address these issues,” the governor said.
Newsom also proposed $ 600 in cash payments to the state’s lowest wage earners, funds it hopes will be distributed in February and March and cost an estimated $ 2.4 billion. Its budget plan also calls for legislators to determine the use of $ 2.6 billion in federal funds for struggling tenants and new assistance for property owners whose mortgage payments are at risk due to unpaid rent.
While the democratic legislative leaders applauded the governor’s proposals, there were hints of concern raised last year about the legislature’s ability to oversee key spending decisions made quickly in response to the ongoing health crisis. Speaker of the meeting Anthony Rendon (D-Lakewood) called for close oversight of pandemic relief spending.
“We want to ensure that the relief for the unemployed, small businesses, non-profit organizations and others is distributed fairly and efficiently. The same kind of tight budget over the past decade has provided the surplus that mitigated the blow to COVID in 2020, ”Rendon said in a statement.
Newsom’s ability to take action itself may raise money in support of vaccination efforts in California. Its budget, which was finalized weeks before the vaccines were approved by federal officials, set aside $ 372 million for state-sponsored efforts. While local officials and health care providers are playing a more direct role in the distribution of vaccines, the governor said Friday that he believes at least 1 million COVID-19 vaccine injections should be completed by January 17.
“Here’s your next thing to hold me accountable,” he said of the promise.
According to the budget proposal, the high demand for unemployment benefits will continue, although some sectors of the California workforce have remained stable. Newsom’s proposal expects the state to borrow $ 48.3 billion from a federal unemployment trust fund to cover benefits provided to state residents. According to federal rules, states must pay interest on the loans, and California officials expect the loan to cost $ 555 million in the coming financial year. The governor’s budget also includes $ 11.4 million for the California Department of Technology to review and improve services in select key departments, including the Department of Employment.
Not all of the governor’s proposals provide extra money to solve urgent problems. The plan he announced last week to return some of the youngest students in California to classrooms in February is based on $ 2 billion in tax revenue already guaranteed by the state’s constitution to public schools. Newsom’s proposal will distribute the dollars differently: school districts that complete the COVID-19 personal education safety plans by February 1 will receive at least $ 450 and up to $ 800 per student for pandemic-related needs – even if local virus transmission rates are too high for students to return next month.
Schools that do not complete the planning process until 1 March will receive smaller grants per pupil. The plan requires participating public schools to offer all primary school students the option to attend at least some classes on campus by mid-March if health conditions allow.
However, the deadlines for the reopening of the school cannot be met if the legislature does not act on the plan this month. Even then, school district officials found the governor’s timeline difficult. A major obstacle could be that the reopening plans have to represent the local unions representing teachers and school staff.
Schools will also be encouraged to offer new summer programs and additional efforts to reduce the setbacks caused by distance learning through distance learning. In total, Newsom’s plan includes $ 4.6 billion for those services.
The various proposals released on Friday cover both a review of the existing budget the governor signed last summer and his $ 227.2 billion spending proposal for the July 1 financial year. Legislators have a greater opportunity this year for a course correction during the midst of the current budget cycle, the result of the different sectors of the California economy fared better than expected during the first nine months of the public health crisis.
Some of last year’s spending cuts will be reversed if lawmakers accept Newsom’s plan. Colleges and universities alike will see an increase of $ 951 million in funding for the coming academic year. And spending on the state’s legal system will increase by $ 381 million, with the focus on ensuring that the pandemic does not cause long delays in dealing with criminal cases.
How the state’s financial condition went from risky to robust is a story that focused on the uncertainty about economic conditions this past spring.
When lawmakers accepted last year’s forecast for tax revenue, it was expected that an unprecedented number of Californians would lose their jobs, and many of them would seek help in the state’s health and human services programs. Unemployment rose sharply in much of 2020, but millions of middle-class and high-wage workers were able to keep their jobs and work from home. Tax collections also rose after the strong capital gains earned by the state’s richest taxpayers increased sharply.
Monthly tax collections over the past summer and fall have been beating expectations throughout. In November, independent legislative analysts predicted that excessive budget forecasts from last year could lead to $ 26 billion in unexpected cash for government programs. Newsom’s budget largely agrees with the legislative forecast, but assumes that some of the money will be used to fund social safety net programs and that a large portion of the law will need to be preserved in California’s long-term cash reserves.
The ripple effects, coupled with the expectation of additional stimulus and pandemic assistance from the federal government, could provide the state government with a substantial shelter from the economic storm. It could also lead to some surprises, which are no more shocking than the potential for a modest but significant $ 51 million refund to taxpayers under an obscure 1979 law that measures spending, personal income growth and population to determine or Californians should get a rebate on their taxes. The final decision on whether this will happen will only come in the spring.
Times author Patrick McGreevy contributed to this report.