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Gov. Newsom to propose spending plan for $31-billion California surplus

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Rich Pedroncelli
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AP Photo
California Gov. Gavin Newsom speaks about his 2021-2022 state budget proposal during a news conference in Sacramento, Calif., on Jan. 8, 2021. On Monday, Jan. 10, 2022, Newsom will unveil his proposed 2022-2023 budget plan.

Gov. Gavin Newsom will propose a plan for spending an estimated $31-billion surplus Monday morning, along with the rest of the state’s budget, which topped $262 billion in the 2021-2022 budget year.

The annual budget event— California governors are constitutionally required to present a balanced budget proposal by Jan. 10 — is just a wishlist; the spending plan will likely undergo changes during the six-month budget-building process, which includes negotiations between the governor and top legislative leaders.

Meanwhile, the state will continue to get a clearer picture of the state’s finances as revenue numbers crystallize before the June 30 budget deadline.

On Saturday, Newsom announced he would seek $2.7 billion in additional funds to fight the COVID-19 pandemic. He’s asking the Legislature to approve just over half that amount in the coming weeks in order to pay for increased testing, vaccination and booster campaigns, and staffing support for hospitals.

The total package would include $1.2 billion to boost testing, including millions of antigen tests for local health departments, schools and community clinics.

Administration officials say 9.4 million test kits have now been delivered to county offices of education as part of Newsom’s promise that every student would get a test after the holiday break. According to the Los Angeles Times, less than half arrived before many students returned to classes on Monday, and as of Friday, 17 counties still had not received any tests.

California’s total number of hospitalizations is dangerously close to the peak of 53,000 during last winter’s surge. As of Saturday, 52,057 hospital beds were occupied, including patients with COVID-19 and other ailments. The administration is asking for $614 million to pay surge staff at strained hospitals.

In November, the nonpartisan Legislative Analyst’s Office (LAO) estimated the state will see a $31-billion surplus for the 2022-23 budget year.

If the projections hold, it will be the second year in a row California’s coffers experience a hefty windfall, sustaining the bounceback from 2020’s record-shattering $54-billion deficit.

The size of the surplus has ignited discussion about the Gann Limit, a constitutionally required cap on state spending. If state revenues exceed the limit, which is based on previous years’ spending and growth, excess revenues are to be split between taxpayer rebates and funding for schools.

Lawmakers have some flexibility to avoid reaching the limit, according to a 2021 LAO report.

Here’s a timeline of California's annual budget adoption process:

  • January: The governor submits a proposed spending plan to the Legislature by a constitutional deadline of Jan. 10. 
  • May: The governor refines the budget proposal using clearer revenue numbers provided by the Department of Finance. This is known as the “May Revise.”
  • June: Lawmakers have until June 15 to pass a budget. The spending plan is generally spread out across multiple bills, including “trailer bills,” or smaller appropriations that can be passed after the June 15 deadline. The governor must sign a budget by June 30. 

Newsom will present his proposed budget starting at 10:30 a.m.