Newsom Releases Revised Budget Proposal

Gov. Gavin Newsom released his May Revision to his proposed 2023-2024 state budget last week, which includes spending reductions and deferrals to help mitigate his projected $31.5 billion shortfall, up from a projected $22.5 billion shortfall in January. However, the budget also includes $2.9 billion in new, discretionary spending proposals.

The non-partisan Legislative Analyst’s Office (LAO) responded to the budget’s revised proposal, cautioning that the budget problem is “$6.2 billion larger than the administration’s estimates.” This amount is more than the entire operating budget of many countries. The LAO also pointed to the budget’s “$11 billion in one-time or temporary spending planned for 202324—amounts that appeared affordable when enacted in previous years but appear less so today.”

The California Catholic Conference noted several changes to the budget in areas of concern, such as the $30 million previously committed to fighting human trafficking over the next three years was not included. An estimated 26 providers are likely to close due to pressures from the pandemic and the lack of this funding.

The budget also reduced spending for climate and environmental commitments, decreasing spending by $6 billion and $5.5 billion, respectively.

While Newsom made additional cuts to arts, music, and other school grants, he did include allocations for mandated dyslexia screening in early grades.

In addition, $40 million over the next two years for CASA recruitment and training was restored in the May Revise. A bipartisan group of legislators urged the governor to restore this critical funding after it was proposed for reductions in the January Budget.

Childcare providers were allocated $183 million to enact an 8% Cost of Living Adjustment, much lower than the 25% increase requested by providers and the Legislature.

Proposition 98 funding for public K-12 schools and community colleges dipped from $108.8 billion to $106.9 billion between the January budget and the May revision. Overall per-pupil funding dropped by about $14 to $23,706.

California’s public schools can expect a hefty 8.2% cost-of-living adjustment — up from 8.13% in January — to help them carry the burden of inflation. As for higher education, Newsom reduced the amount reserved for building maintenance at CA universities by $500 million while retaining his commitment to a 5% increase in funding to UCs and CSUs.

The state continues to focus on strengthening local collaboration between cities, counties, and their service providers to prevent and address homelessness. The May Revision continues to include $3.7 billion in funding for homelessness programs. Since 2019, the state has invested over $17 billion to aid local governments in addressing homelessness. These long-term investments have been complemented by flexible homelessness aid that provides services and supports to result in an effective model of housing and services.

Housing the May Revision includes $27.5 million in reductions and $345 million in deferrals related to housing programs. Despite these reductions, housing program funding remains at approximately 88 percent of the allocations made in 2022-23.  As proposed in the Governor’s Budget, if there is sufficient money in 2024, $350 million of these reductions will be restored.

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