Governor Newsom, lawmakers share budget goals but details differ

California
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California Gov. Gavin Newsom heaped praise on legislators as he revealed his updated $213 billion budget last week.

The Democrat who is five months into the job applauded Assembly Speaker Anthony Rendon’s focus on universal preschool. He called Senate Budget Committee Chairwoman Holly Mitchell the champion of increasing grants for low-income families.

He even thanked several Republicans, including Assemblyman James Gallagher, who has sought assistance for the city of Paradise that he represents and mostly was destroyed by a wildfire last year.

All that goodwill is about to be tested as Newsom and the Legislature enter the final weeks of budget negotiations. Lawmakers must pass a spending plan by June 15 or lose pay, then Newsom has until June 30 to sign it.

His proposal released Thursday carries many of the Democrat-dominated Legislature’s priorities: more spending aimed at children and the poor, a health care expansion for young people living in the country illegally and the elimination of sales tax on diapers and tampons.

“It’s clear that he has heard from Californians quite frankly, not just us as policy makers, who need their state government to step up and invest in them,” Mitchell said.

But he also gave the same warnings as his predecessor, Jerry Brown, that the state’s strong economy — and the huge budget surpluses it’s creating — won’t last forever.

Newsom has allocated $15 billion to pad state reserves and pay down debt and put cutoff dates on key proposals that Democratic legislators want to make permanent. He also wants lawmakers to take politically painful votes such as putting a tax on water.

“It’s a great starting point,” Democratic Assemblywoman Lorena Gonzalez of San Diego said of Newsom’s plan.

Her comment neatly encapsulates the situation for many progressive Democrats; they like much of what Newsom is saying but don’t necessarily see his plans as an end point.

Gonzalez, for example, has pushed for eliminating sales tax on diapers for at least five years. Newsom’s proposal ends the cut in 2022.

Newsom said he imposed a cut-off in case revenue isn’t as robust in future budget years. A so-called sunset provision can make it easier to win support from lawmakers, Gonzalez noted, because the tax break can go away in future years without lawmakers having to take a painful vote to cut it.

During budget talks she said she will up the ante and push for permanent revocation of the sales tax on diapers.

Newsom isn’t giving many clues to lawmakers about which items on his wish-list are the top priorities saying he’s done enough negotiations to be cautious about showing his hand.

“Everything I said matters to me, or I wouldn’t have said it,” he said. “I’m using the budget in ways to advance things I care deeply about.”

Assembly Budget Chairman Phil Ting said he hasn’t had a conversation with Newsom about priorities. Ting, who worked as San Francisco’s assessor when Newsom was mayor, said he wasn’t surprised Newsom isn’t showing his hand.

“That sounds exactly like him,” Ting said.

Ting said overall he was pleased with Newsom’s budget proposal, but highlighted some concerns, notably that many of Newsom’s biggest spending increases are also slated to expire in two years.

Beyond the diaper tax, that includes big commitments to increase rates for providers of Medi-Cal, the state’s health program for poor children and adults, along with expanded preschool slots and more services for people with development disabilities.

Newsom has proposed several new taxes and fees that would pay for things such as bolstering the state’s 911 emergency services and clean up contaminated drinking water in the Central Valley. Those ideas require a two-thirds vote of the legislature, which Ting said will be hard even though Democrats have super-majorities in both chambers.

“It’s not clear where the votes are for all of that,” Ting said.

Newsom’s budget also relies on conforming California’s tax law with federal changes pushed by Republican President Donald Trump. Additional revenue it generates will go toward a major expansion of a tax credit for working families. The tax change similarly requires a two-thirds vote.

Asked how he’d convince lawmakers to take those votes, Newsom said: “Vote your conscience, do the right thing.” Then he turned flippant, noting the tax law changes would decrease what types of expenses people can deduct.

“I’ll remind folks it’s about no longer writing off courtside seats at the Kings’ game,” he said, referring to Sacramento’s NBA team.

On the water issue, meanwhile, Newsom declared confidently that a deal would be struck. While he’s proposed a tax, some lawmakers would rather the state use surplus or other general fund dollars. It likely won’t be dealt with as part of the budget package due June 15.

“I don’t want to say ‘read my lips’ because I don’t want to see that clip,” he joked. “But we’re going to get a water deal.”

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