SACRAMENTO – The continued prosperity of California’s richest taxpayers fills the state coffers with a surplus of $ 97.5 billion, bringing the state’s next budget to a record $ 300 billion, Gov. Gavin Newsom said Friday.
This is the largest budget in California and the largest surplus so far.
“No other state in American history has had such a surplus as this one,” Newsham told a news conference in downtown Sacramento.
The surplus highlights the gap between rich and poor in California, which is both the richest state in the nation and home to the highest proportion of people living in poverty. The state taxes its wealthiest residents and businesses, which means that their prosperity during the pandemic has filled the state coffers to the brim, even as millions of Californians struggle to afford food and gas as inflation raises prices.
Newsham said he saw the high revenues not as a sign that taxes should be reduced, but as proof of that division.
“This is a sign of what is happening in some respects in this nation and around the world: the concentration of wealth and success in the hands of a few who enjoy abundance in historical and unprecedented ways,” he said. “I’m proud of California’s progressive tax system.
The money gives the governor of the Democratic Party and state lawmakers another opportunity to spend large sums on their top priorities. Much of the surplus will go to education and other trust funds, while the rest, about $ 49.2 billion, can be spent at their discretion.
On Friday, Newsom unveiled his updated budget plan, which will provide cash benefits for Californians to counter the effects of inflation and expand abortion care. Its budget will also fund transportation projects and spend $ 2.3 billion to fight the ongoing COVID-19 pandemic.
During his two-hour press conference outlining the plan, he contrasted California with other states and stressed how contingencies in cash would help him and lawmakers pursue their liberal goals.
Newsham, a staunch abortion rights manager, uses the language of the anti-abortion movement, describing his proposed costs of fighting COVID, improving education and expanding health care as a “life-long agenda.”
He highlighted pandemic deaths in other states, noting that others were much higher than in California. He said his administration’s efforts to vaccinate its population against COVID, fight climate change and provide prenatal care are life-saving.
Surplus funding for education in California will rise to an unprecedented $ 128.3 billion. Meanwhile, Newsom said, conservative states are focused on banning books or restricting teaching about race and sexual orientation.
“If you are for the benefit of life, you would actually support healthy gun safety laws, you will expand post-school programs,” he said. “The same people who claim to be for life are cutting short these programs.”
But California is still facing major problems, Newsom acknowledged, citing homelessness as a major problem for the state. Its May budget adds $ 700 million to help the homeless and $ 500 million to turn malls and office buildings into homes. These proposals are based on billions more funds for housing and the homeless, which Newsom approved in last year’s budget and proposed in his initial budget plan for 2022-23, which he announced in January.
At the heart of Newsom’s plan to fight inflation and high gas prices remains its proposal to send up to $ 800 to vehicle owners. The plan will give $ 400 per vehicle, with a limit of two per owner. Cars worth more than a certain value will not be eligible for payment, although Finance Ministry spokesman HD Palmer said the amount is yet to be determined.
Newsom unveiled the plan for gas discounts earlier this year, but it came amid opposition from some lawmakers, who say it would be more appropriate to send money to people based on income rather than car ownership. .
Newsom also wants to add billions to cover the rental and utility bills that people missed during the pandemic, and send bonus payments of up to $ 1,500 to workers in hospitals and nursing homes for their work in the fight against COVID-19. . Its budget will also add health subsidies for middle-income people and more to cover childcare for low-income families.
His plan will also add $ 8 billion in energy costs, mostly to build up an electricity reserve to prevent future power outages, and $ 1.3 billion to respond to the drought as the country faces water shortages. Following complaints from counties that his proposal for a new lawsuit to force seriously mentally ill people to receive treatment is insufficient, he is proposing to add $ 65 million to support its implementation.
To become law, Newsom’s plan will need approval from the legislature, which even members of Newsom’s own party say will not be automatic.
While some of the governor’s proposals, such as funding for abortion care, are in line with the legislature’s priorities, not all are doing so, said Senate President Pro Tem Tony Atkins.
“Others, as happens every year, will require more discussion and negotiation,” the San Diego Democrat said in a statement. She did not specify which proposals she meant, but earlier this month approved a different plan to send funds to help residents.
Republican leaders have criticized Newsham’s plan much more openly, even though they are so superior to Democrats in the legislature that the governor and legislative leaders do not need their support.
Senate Republican leader Scott Wilk of Santa Clarita focused on the governor’s plan to send payments to vehicle owners, saying it would take too long.
“Suspending the gas tax would be the quickest way to give families immediate relief from rising gas prices,” he said in a statement.
News and lawmakers must agree on a budget framework by mid-June, although they could continue to reveal details after the start of the fiscal year on July 1, as they have done in recent years.
Newsham hinted at the upcoming talks, noting that he and legislative leaders disagree.
“I want to confirm that none of this is possible without their partnership,” he said. “We have differences and that’s wonderful … I look forward to working with the legislature on many of these issues.”
Sofia Bolag is a full-time writer for the San Francisco Chronicle. Email: sophia.bollag@sfchronicle.com Twitter: @SophiaBollag
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