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California Governor Newsom Proposes Record $213 Billion Budget


(Bloomberg) — California Governor Gavin Newsom on Monday unveiled a $213 billion general fund budget for the next fiscal year, buttressed by a $45.7 billion surplus as the most populous U.S. state enjoys strong tax revenue in the lopsided recovery from the pandemic.

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The spending plan, up almost 1.4% from the current year, allocates billions of dollars to coronavirus response, mitigating wildfires and drought, easing homelessness and extending health care coverage to all undocumented residents.

“This year, we are in a substantially better place than we projected last January,” said Newsom, a first-term Democrat, during a briefing in Sacramento.

Newsom will revise the budget in May accounting for the latest revenue figures. Lawmakers have to approve it by June 15 or forgo pay. Some of what he proposes uses federal dollars and other sources apart from the general fund.

Newsom’s spending plans include:

$2.7 billion to bolster Covid testing and vaccinations

Of that, $1.4 billion is an immediate emergency appropriation

$1.2 billion on wildfire mitigation

$750 million for drought relief

$2 billion for mental health services for homeless people and clearing encampments

$2 billion in grants and tax credits to spur more affordable housing

$255 million in grants to local law enforcement to combat retail crime

With a progressive tax system that rakes in more revenue when the income of the highest earners rises, California continues to collect more than it forecast. Wealthy residents have reaped the benefits of rising stock prices and stable employment even as lower-income workers lost their jobs during the pandemic. The top 1% of earners pay nearly half of personal income-tax collections.

This is the second year of the pandemic that the state’s notching a massive surplus. The current budget spends approximately $210 billion.

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