Legislators dig in on Gov. Newsom’s budget proposal

Newsom also projected a rainy-day fund of $15.3 billion by the end of the 2019-20 fiscal year, noting investments in ongoing and sound one-time expenditures will allow the state to maintain a surplus in the coming years, even as officials prepare for an impending economic downturn.

Assemblyman Kevin Mullin, D-South San Francisco, said he agreed with other legislators who lauded Newsom’s budget for presenting a more human-oriented spending plan than they have seen in recent years. With funding slated for health care and early childhood education, plans included in the budget to inch the state closer to universal health care coverage and the individual mandate marked a step in the right direction for Mullin, who commended Newsom for focusing on investments that could signal future savings in the state’s criminal justice and health care systems, among other areas.

“He understands the importance of investing in people,” he said. “It’s smart investing in people, so I was very encouraged to see all of that.”

Having hoped the governor will take on comprehensive tax reform early in his term, Mullin was also encouraged that Newsom acknowledged a 2020 revision of Proposition 13 could be used as a bargaining tool in working toward a tax reform deal.

Housing

But Mullin, who is also speaker pro tempore of the Assembly, had mixed feelings about the governor’s approach to addressing the state’s housing crisis, which he felt missed an opportunity to restore redevelopment agencies and proposed a punitive measure on cities that don’t meet state Regional Housing Need Allocation, or RHNA, requirements. Acknowledging redevelopment agencies as the single greatest source of funding for affordable housing, Mullin was disappointed a restoration of them was not included in Newsom’s budget.

Though he appreciated Newsom’s drive to take action on housing, Mullin hoped the coming months could bring more clarity on the plan for building the 3.5 million housing units Newsom hopes to take shape across the state by 2025. He also took issue with the governor’s proposal to limit transportation funds available to cities that don’t meet their RHNA requirements, noting the downshift in funds could be counter-productive and not sit well with many of his colleagues.

“Simply punishing cities is not going to have the intended effect,” he said. “He’s really just going to make it more difficult for communities, if you take their transportation infrastructure funding away from them, to develop the right way.”

Mullin advocated for the governor to focus on the underlying state and local funding available for affordable housing, noting the property tax generated from the development of affordable housing is not enough to incentivize cities to build it.

Education

For Assemblyman Marc Berman, D-Palo Alto, Newsom’s proposal presented a balanced budget with increased funding in the right places. Though he expected to see investments in early childhood education in Newsom’s budget, he said he was pleasantly surprised to see increased funding in higher education. Newsom proposed $36.4 billion in total funding for higher education, up $1.4 billion over revised 2018-19 expenditures, according to his budget summary.

Berman expected the governor’s willingness to dedicate funding to higher education so early in the year to allow educators to focus on forming policies that will leverage those funds effectively instead of spending time pushing for more funding for the first half of the year until a budget is passed.

“It was nice to see the governor just come out in front and say ‘hey we’ve underinvested in our systems of higher education, and I’m going to increase spending,’” he said.

In commending Newsom for his commitment to Local Control Funding Formula, school construction, services for young children and families and rising school pension costs, Dr. Emma Turner, president of the California School Boards Association, noted the organization is encouraged by the governor’s first budget and his appreciation of the critical issues public schools face.

But with one of the largest economies in the world and low levels of per-pupil funding, the state is in need of even greater investment to improve student performance and close opportunity and achievement gaps, she argued.

“Now that the arrow is pointed in the right direction, we need to augment positive intent with substantial and concrete investment,” she said in a statement.

Spending, tax reform

State Senate Republican Leader Patricia Bates, R-Laguna Niguel, counted the expanded efforts to pay off debt, an increase in the Earned Income Tax Credit and a plan to expend voter-approved bond and tax funds to build and modernize schools among the items to applaud in the governor’s first budget. But she noted the governor’s budget would be an increase of $8 billion over last year, and remained concerned about the state’s unfunded liabilities and proposals to expand services and obligations that the state may not be able to afford when the economy slows down. “Democratic state legislators have already proposed $40 billion in new spending, much of which would be above and beyond what the governor has proposed,” she said in a statement. “Hopefully the final budget will reflect more caution.”

State Sen. Jerry Hill, D-San Mateo, viewed the governor’s budget proposal as a document outlining smart investments in the state’s future.

“This budget will benefit Californian’s quality of life: more access to early childhood education and health care, making college more affordable, more investments in our rainy-day reserve, paying down debts and pensions, more funding for housing, and the highest level of K-12 spending in our state’s history,” he said in a statement.

Though Mullin hoped Newsom would provide more specifics on how comprehensive tax reform could be achieved, he felt the governor’s first budget marked a welcome shift in focus onto priorities the Legislature has pegged for years. Mullin said he senses Newsom has a genuine willingness to engage with legislators on key issues, and looked forward to the conversations that will shape his budget revision in May.

“I think there is already better alignment between his priorities and the Legislature’s priorities,” he said. “I think he’s really setting the right tone out of the gate here.”

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