Governor Gavin Newsom released a proposed state budget that increases spending by 2.3% and includes giving taxpayer-funded health benefits to older adults living in the country illegally, funding for a medical school at UC Merced and a new tax on vaping.
Newsom's $222 billion proposed state budget increases spending by about $5 billion, but it also would boost state reserves to $21 billion in case of an economic downturn. In addition, the state would get $107 billion from the federal government for various programs.
The budget proposal is a record spending level, prompting caution from local legislators.
"The Governor's proposed budget increases spending to an alarming $222.2 billion," said Senator Andreas Borgeas. "We have seen California's $21.5 billion surplus in Fiscal Year 2019-20 drop to an estimated $4 to $7 billion surplus in FY 2020-21, according to the Legislative Analyst's Office (LAO) 2020 Fiscal Outlook. Should current trends continue, California may enter a recession in the next fiscal year. Therefore, California's fiscal approach should be prudent and responsible, remembering that investments in infrastructure, disaster preparedness, transportation, housing and water are our most immediate concerns."
Newsom detailed his proposal for nearly three hours on Friday, lauding California's growing reserves and bountiful surpluses.
Last year, California became the first state to offer full taxpayer-funded health benefits to low-income adults 25 and younger living in the country illegally. This year, Newsom wants to extend those benefits to adults 65 and older living in the country illegally. The coverage would begin in 2021 and cover about 27,000 people initially with an estimated cost of $350 million when fully implemented.
But he did not make people living in the country illegally eligible for the state's earned income tax credit, which gives money to low-income people as part of their tax refunds.
"One is health care, a right from my perspective, and one is allowing working families to keep more of what they earn. I distinguish the two," Newsom said. "It's also a question of capacity. We want to do a lot of things, but we can't do everything."
Newsom proposed giving public school teachers $20,000 if they would teach four years in a high-need subject at a high-need school. That program alone would cost $100 million, which Newsom called "a commitment to reward those teachers for doing the right thing."
The budget proposes a $217.7 million ongoing General Fund augmentation to support a 5 percent increase in base resources for UC campuses and service expansion for the UC San Francisco School of Medicine Fresno Branch Campus in partnership with UC Merced, among other programs.
“The Central Valley continues to have some of the lowest numbers of doctors per capita in the state, and the need will only increase as existing physicians retire,” said Assemblymember Adam Gray. “Governor Newsom’s proposed budget allocates $15 million per year in ongoing funding to UC Merced and UCSF-Fresno to expand medical education in the Valley. This investment will allow more students to train to become doctors right here in the Valley, and it will directly increase access to care in our community – one of my top priorities during my time in the legislature. I am encouraged by Governor Newsom’s ongoing commitment to the Central Valley and with his investments in education and health care.”
Newsom's budget proposed one new tax: an additional tax on vaping. E-cigarettes are already taxed like other tobacco products, but Newsom is proposing an additional $2 tax for each 40 milligrams of nicotine in E-cigarettes. The tax would bring in about $32 million, and the state would spend it on enforcement and youth prevention programs.
The spending plan includes a $5.6 billion surplus. The budget would create a number of new programs and agencies, including an Office of Health Care Affordability and the Department of Financial Protection and Innovation, which will seek to revive Obama-era consumer financial protections.
The budget would also pay down state debt, including an additional $5.9 billion toward the state's unfunded pension liabilities.
To address the housing crisis, the budgets includes $6.8 billion across multiple departments and programs to increase housing production and help provide access to services to individuals and families with immediate needs. Newsom signed an executive order Wednesday creating a proposed $750 million fund to pay rents, fund affordable housing or help board and care homes.
— The Associated Press contributed to this report.