To deal with the deficit, Newsom will shift $4.3B in spending on zero-emission vehicles from the state’s taxpayer-funded general fund to a special fund paid into by polluters, and is delaying by a year $3.1B in climate and transportation funding.
Newsom's presentation offers the first glimpse of his spending and policy priorities as he launches his second term, but it's not the final say on how the state will dole out money. He'll reassess the state's finances in May after tax revenue has come in, and he'll sign a final budget in June.
Dealing with a deficit will be a change of pace for the state, where spending has more than doubled in the 10 years since the last recession. Officials have launched a dizzying amount of new programs and services — including committing to pay for all 4-year-olds to go to kindergarten and agreeing to cover the health expenses of all low-income immigrants who are living in the country without legal permission.
With rich people not making as much money, they are paying less in California state taxes. So far this year, California’s tax revenues have been $4.6 billion below expectations — not including some one-time corporate tax payments that state officials say they can’t count on. Plus, the state has $37.2 billion stored across its various savings accounts, which by itself would be more than enough to cover a $25 billion deficit. Constitutional limits prevent lawmakers from emptying reserves to cover a deficit. And unlike the federal government, California’s budget must be balanced. Newsom and lawmakers will have to tighten state spending to cover all of the shortfall — something that Senate Budget Committee chair Nancy Skinner said is doable.
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