SACRAMENTO, Calif. (CN) — Top California lawmakers on Wednesday unveiled a joint legislative budget proposal that restores funding to housing and social services following proposed cuts to each.
Assembly Speaker Robert Rivas and state Senate President Pro Tempore Mike McGuire, both Democrats, said the two chambers agreed on those budget priorities. They also wanted to save about half of California’s reserves for the future.
“Fixing California’s deficit means making tough choices, so the Assembly came to these negotiations focused on preserving programs that matter most to Californians: lowering the cost of living, expanding affordable housing access and sustaining public services,” Rivas said in a statement.
McGuire praised the numerous budget committees and subcommittees that have worked to meet the June 15 budget deadline for lawmakers.
“This agreement is sound and makes the necessary tough decisions meeting the needs of this critical time, all while maintaining our commitment to strong public schools, investing in desperately needed resources in homelessness and workforce housing, health care access, resources to keep our communities fire safe, key climate investments and more,” McGuire said in a statement.
The legislative leaders’ announcement comes a day before the Assembly Budget Committee is set to adopt the 2024-25 budget package. Several state Senate budget subcommittees are also scheduled to meet Thursday.
Legislators and Governor Gavin Newsom have been facing a massive budget deficit for months. The Legislative Analyst’s Office last year revealed what at the time it called a $58 billion shortfall. That figure later ballooned to $73 billion — though Newsom, a Democrat, has countered that the deficit was only around $38 billion.
Lawmakers responded with a so-called early action bill that — through maneuvers like pulling back money allocated but not yet spent — reduced the deficit.
On Wednesday, Rivas and McGuire said their budget plan balances the 2024-25 budget year as well as the following fiscal year. Fiscal year 2024-25 will have $23 billion in total reserves, while 2025-26 will have about $13.3 billion in reserves.
According to Wednesday’s plan, the 2024-25 year has a $45 billion shortfall. The following fiscal year has a deficit of over $30 billion. Lawmakers have filled those budgetary gaps with solutions of $46.9 billion and $29.8 billion, respectively.
Those solutions come from reductions in programs, to the tune of $16.6 billion for 2024-25 and $11.6 billion for 2025-26. Other fixes are in the form of delaying spending, shifting funds and reserves.
One example of shifting funds is the $3 billion in climate-related investments. That money, initially coming from the general fund, will now come from the greenhouse gas reduction fund.
Another shift affects the University of California and California State University systems. Each system will receive a 5% base increase in 2024-25. However, a base increase for 2025-26 will be deferred by a year.
The legislative plan sets aside aspects of Newsom’s budget, which would have permanently eliminated some $2.4 billion in annual health investments and was slated to go into effect on Jan. 1, 2025. Those investments will be delayed a year, with some changes.
Some $500 million for a low-income housing tax credit program is also included in the new budget, as it was in the governor’s. In addition, lawmakers added $1 billion to the state’s homeless housing assistance and prevention program, funding which local government leaders say is necessary.
Newsom’s original budget didn’t include funding for the homeless program — but "the Legislature’s budget plan restores funding to build more homes, supports K-12 classrooms and rejects many of the cuts that impact our most vulnerable residents,” Rivas said.
“We look forward to delivering a final on-time balanced budget in the weeks ahead,” McGuire said. He and Rivas say they are prepared to work with Newsom to get a balanced budget passed by deadline.
The governor's office said Wednesday afternoon that it was reviewing the budget proposal.
"The administration will continue to work with the Legislature and stakeholders to deliver a balanced budget in June that cuts spending, makes government leaner, and preserves the state’s ongoing fiscal integrity to protect core services that hardworking Californians rely on," a spokesperson said in a statement.
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