California legislative analysts’ surplus figure differs from Newsom’s

California

SACRAMENTO, Calif. (KRON) — State financial analysts say California’s actual budget surplus may not be as large as the governor says it is.

Gov. Gavin Newsom has proposed using what he is considering a $76 billion surplus for California’s economic recovery plan, yet experts say some of that spending should be reconsidered.

The non-partisan California Legislative Analyst’s Office estimates the state budget surplus to be $38 billion, a figure half of what Newsom has said it is.

The discrepancy comes down to the definition of budget surplus with the governor using one definition while the LAO is using another.

The LAO says Newsom’s accounting included funds the state is constitutionally required to spend on schools, reserves and debt payments.

“Traditionally, our office, when we estimate how much discretionary surplus there is for the legislature to allocate, we do not include that,” explained Gabe Petek, a legislative analyst for the State of California. “I think you could defend really either definition. It’s just that we wanted to provide the readers with our traditional way of calculating the number.”

Newsom has spent more than a week touring the state and touting his proposed “California Comeback Plan” with his $76 billion version of the surplus.

The governor promoted parts of the plan in front of the state’s tourism committee Tuesday.

“In that comeback plan: record surpluses, record reserves, record investment,” Newsom said.

With the surplus and $27 billion in federal relief funds, Newsom wants to use California’s healthy financial position to make historic investments, most of it in one-time spending.

The LAO suggests that state leaders work on building California’s budget resiliency by replacing money taken out of the rainy-day fund in last year’s projected downturn, which Newsom has not proposed.

Analysts also note Newsom’s spending plan proposes about 400 new programs.

The LAO is urging state leaders to consider narrowing the list and earmarking money in a more targeted way.

“While it’s a very large surplus, we’re not going to be able to solve the issues that all 400 proposals are trying to tackle,” Petek said.

Some Republican California lawmakers, like the Assembly’s vice budget chair, Assemblyman Vince Fong, R-Bakersfield, say they want to follow the LAO’s guidance because of concerns with the governor’s plan.

“As an analogy, it would be spending down your retirement savings with additional expenses at a time when there’s additional income coming to yourself. It’s just not fiscally responsible,” Fong explained.

Democratic legislative budget leaders say they still see a big opportunity.

“To make major investments to lay a foundation that will have an impact for decades to come,” said Assemblyman Phil Ting, D-San Francisco.

With a June 15 deadline, the California Legislature and Newsom have a month left to sort out the state budget.

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