Newsom Signs $352B Spending Plan       06/30 06:08

   

   SACRAMENTO, Calif. (AP) -- Democratic Gov. Gavin Newsom signed a nearly $352 
billion spending plan Monday that delays some cuts to healthcare programs, 
increases funding for childcare and sets aside money to help speed up the 
state's vote count ahead of the November election.

   The plan, which avoids major cuts or significant new spending, is Newsom's 
last before he leaves office in January and as he considers a presidential run. 
California's spending priorities are likely to be under a microscope if he 
seeks the White House.

   Newsom used the budget deal's passage as a chance to highlight some of those 
priorities over his nearly eight years as governor. He released a video address 
touting state policies and spending to provide free meals at school, expand 
internet access, ramp up renewable energy production, and raise the minimum 
wage for fast food and healthcare workers.

   He also noted the budget approved this year puts more money into state 
reserves, which he said shows the state's fiscal prudence in the face of 
criticism that California lacks restraint when spending taxpayer dollars.

   He tried to contrast California -- which is the frequent target of attacks 
by GOP politicians including President Donald Trump -- with Republican-led 
states and the federal administration.

   "To every other state across our country -- to Washington, D.C. -- to anyone 
who's been told that responsibility and ambition can't share the same balance 
sheet: Come to California," he said.

   Budget includes limited tax increases

   The budget aims to increase state revenues by billions of dollars by 
reforming a tax on healthcare providers, imposing a sales tax for certain 
software products and limiting tax breaks on large corporations. Newsom has 
generally opposed broad new tax increases during his time as governor but has 
approved more targeted measures. He's against a one-time tax on billionaires 
pushed by a healthcare union that will go before voters this November.

   Newsom and legislative leaders in the Democrat-dominated statehouse say 
their plan includes no deficit for the upcoming fiscal year and will help the 
state respond to Trump's cuts to healthcare for low-income people.

   "We have done a lot of work to mitigate harm, to protect vulnerable 
communities," Assembly Budget Committee Chair Jesse Gabriel said at a hearing, 
though the Democrat acknowledged the state wasn't "in a position to fully 
backfill those federal cuts."

   Republicans say the new laws are a temporary solution to the state's budget 
woes because they focus too much on delaying spending and not enough on finding 
places to cut.

   "The governor can claim he has a 'balanced' budget on his way out the door, 
but really, he's just leaving us with his tab," Republican Sen. Roger Niello 
said in a statement.

   California previously faced tens of billions of dollars in budget deficits, 
forcing painful cuts such as a rollback last year on a promise to provide free 
healthcare to low-income immigrants without legal status. Nonpartisan budget 
analysts previously projected the state would see budget holes upward of $20 
billion each year in the next few years. Newsom and the analysts sometimes 
differ in their estimations.

   AI boom fueled higher revenue than expected

   Tax revenues have also come in higher than expected mostly because of the 
booming stock market driven by enthusiasm over the artificial intelligence 
industry, according to the Legislative Analyst's Office.

   That revenue boost allowed lawmakers to stave off some cuts approved in last 
year's budget, including slashing dental benefits for low-income immigrants 
without legal status and increasing premiums for those adults ages 19 to 59 
enrolled in the state's Medicaid program, known as Medi-Cal. Lawmakers agreed 
last year to require those recipients to pay $30 a month starting next year. 
Newsom proposed last month to increase that to $50 monthly, but the budget deal 
leaves the decision over the possible higher rate to the next governor.

   Increasing access to childcare has been one of Newsom's priorities over his 
tenure, and the budget funds nearly 23,000 new childcare spaces for the 
upcoming fiscal year.

   Speeding up the state's vote count

   As California prepares for the November election, the deal includes $29 
million for the Secretary of State office to help the state speed up its drawn 
out vote count by increasing staffing and upgrading technology. Another $10 
million would go toward educating voters on the state's election process, with 
half of that going to counties and the rest going to the state.

   The state's slow process for counting votes has been a target of criticism, 
and Trump and other Republicans have said without evidence that it fuels 
widespread fraud. The budget includes nearly $1 million to support efforts to 
fight misinformation about state elections.

   The November contest will be closely watched because California has a 
handful of U.S. House seats that will be key to help determining control of the 
chamber as well as more than a dozen ballot measures and the race to replace 
Newsom.

   Leaving major spending proposals up to next governor

   As part of the budget deal, lawmakers kicked some of the state's major 
spending decisions to Newsom's successor. Democrat Xavier Becerra, a former 
state attorney general, and Republican Steve Hilton, a former Fox News host and 
adviser to conservative British politicians, are competing to replace Newsom.

   The agreement, for example, delays a decision on how to change how the state 
spends revenue from its cap-and-trade program, which requires major emitters to 
reduce their pollution, buy allowances from the state or other businesses, or 
fund projects aimed at offsetting their emissions. State air regulators 
recently approved updates to the program that could halve a pot of money the 
state receives from allowance sales to fund climate, transportation and other 
initiatives.

   Lawmakers also want to explore ways to penalize large companies for having 
employees enrolled in Medi-Cal, rather than on company-provided healthcare 
plans. Lawmakers plan to direct the Department of Finance to present the 
Legislature with options for how to do that.

   The goal is to reduce costs for the state after Trump signed his signature 
spending legislation last year, which cut federal healthcare funding to help 
deliver tax breaks for individuals and businesses.

   But any proposed penalties on corporations wouldn't be approved until next 
year at the earliest, which disappointed some Democrats.

   "This is a budget that bought time: Medi-Cal delayed, not resolved, not 
restored," Democratic state Sen. Mara Elena Durazo said at a budget hearing 
Monday.

   The deal would also shift management of the state's Department of Education 
to the governor, which Newsom hopes will improve academic outcomes for students.