Newsom’s unbalanced CA budget faces resistance to cuts

By Dan Walters, CalMatters

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Gavin Newsom is trying to finish his governorship on a high note, claiming he has written “a balanced budget structurally for 18 months” that would give his successor some breathing room.

The word “structurally” is the key feature Newsom is touting because for the past four years, after he and the Legislature raised spending on an erroneously expansive revenue projection, budgets have spent a total of $125 billion more than the state’s real revenues, according to the Legislature’s budget analyst, Gabe Petek.

It is what budget junkies term a “structural deficit,” meaning spending commitments are more than the revenue system can cover. Newsom is now claiming that with a recent surge in revenues and some belt-tightening, his 2026-27 budget is now structurally sound.

However, the numbers he presents say otherwise.

His $349.4 billion budget projects that the state will take in $226.5 billion in general fund tax revenues during the fiscal year that begins July 1 but would spend $246.6 billion, a $20 billion gap that’s somewhat smaller than those of recent years but still a structural deficit.

A short-term revenue spike, some spending reductions, some borrowing and the usual mix of other “solutions” would cover the shortfall, but even so, the budget acknowledges that long-term deficits still loom, although perhaps smaller than previous estimates.

Petek says the budget still leaves the state “ill-prepared” for even a small hiccup in revenues.

Newsom is obviously proud of what he has wrought, saying “We’re cutting deficits but not cutting corners.” However, as the June 15 constitutional deadline for passing a budget looms, he and legislators are facing widespread resistance to the budget’s reductions, particularly in education and health and welfare services for the poor and disabled, and to an unwillingness to cover additional cuts in federal aid for those programs.

Scarcely a day passes without some demonstration or other event staged by advocates to pressure the Capitol’s politicians to make their programs whole. And more pressure is coming from powerful education groups because Newsom is holding back some school funds that the constitution requires to be paid.

Last week, for example, the California School Boards Association and a coalition of school unions and other education groups staged a rally on the Capitol steps, demanding Newsom and legislators give schools their designated state aid, reminding them that it’s “a matter of law, not a suggestion that can be discarded when it becomes inconvenient for policymakers,” as the school boards’ president, Debra Schade, put it.

“Yet, for the third consecutive year, the administration has proposed manipulating the Proposition 98 minimum funding guarantee instead of fully honoring it. Once we open the door to the idea that Proposition 98 can be manipulated whenever the state faces fiscal pressure, we fundamentally weaken the protections voters deliberately put in place for California students.”

Healthcare advocates are equally adamant. For example, backers of dental care for poor children released a report saying that “Upwards of 1.2 million low-income California children could lose access to dental healthcare if Gov. Gavin Newsom’s proposed Medi-Cal dental cuts are enacted.”

Meanwhile, supporters of Newsom’s expansion of pre-kindergarten education and childcare are complaining that “the governor is cutting all childcare and pre-K programs by 2% in real spending,” adding, “After championing young children, family supports for several years, the governor’s reversal is odd … in light of his presidential ambitions.”

The Legislature’s supermajority Democrats are obviously sympathetic to the complaints flooding their offices, even to the extent of raising taxes. However, Newsom also doesn’t want to leave after imposing a big increase in taxes.

We’ll soon learn whether legislators will anger advocates of programs they’ve proudly supported to support a lame duck governor who is obviously plotting a run for the White House.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.