California Gov. Gavin Newsom is proposing to cut billions of dollars in climate spending and delay funding of major programs to balance a $22.5 billion budget deficit if tax revenues don’t rebound.
The $297 billion budget blueprint Newsom unveiled on Tuesday, January 10, 2023, was a stark departure from the fiscal boom times California enjoyed as recently as last year, when an unprecedented $100 billion surplus that Newsom himself called “absurd” underpinned a record $310 billion budget. California has $29.5 billion less revenue this year.
The Democratic governor has proposed delaying $7.4 billion in planned spending and cutting items like a $3 billion payment to offset inflation.
He also proposed deferring spending billions of dollars on areas like public universities, transit, behavioural health, building decarbonisation and watersheds. The budget tentatively slices some $3.9 billion that could be spent, if enough money materialises, on areas like housing, workforce development, and climate change.
Much of the nearly $4 billion “trigger cut” – some $3.1 billion – would come out of climate change and transportation. Newsom also proposed paring billions from electric vehicle funding despite his order phasing out sales of new, all-gas-powered vehicles by 2035. Overall, the budget would reduce multiyear climate spending by some $6 billion.
But Newsom is not yet proposing to uncork a budget reserve account that contains some $22.4 billion, and he is not predicting a recession this year. The Democratic governor also maintained his previous commitments to spend on ambitious programmes like universal transitional kindergarten and healthcare for undocumented immigrants.
“We’re not touching the reserves because we have a wait-and-see approach to this budget in terms of being cautious and being prepared,” Newsom said, but he did not rule out tapping the reserve when he unveils an updated budget in May with newer revenue figures.
