- Lake County News reports
- Posted On
California leaders announce early action agreement to significantly reduce budget shortfall, vote planned for next week
The package includes solutions that would enable final budget negotiations to focus on closing the gap and protecting core programs, and agrees to aim for using approximately half of the reserves this year.
It contains a mix of $3.6 billion in reductions (primarily to one-time funding), $5.2 billion in revenue and borrowing, $5.2 billion in delays and deferrals, and $3.4 billion in shifts of costs from the general fund to other state funds.
The package will be included in a budget bill that will be going into print in the coming days, and the package will be vetted by the legislative budget committees early next week. A budget bill could be taken up for votes in the Assembly and Senate as soon as Thursday, April 11.
“I thank our legislative leaders for their partnership in taking this major step to address the shortfall with a balanced approach that meets the needs of Californians and maintains a strong fiscal foundation for the state’s future,” said Gov. Gavin Newsom. “We are able to meet this challenge thanks to our responsible fiscal stewardship over the past years, including record budget reserves of close to $38 billion. There is still work to do as we finalize the budget and I look forward to the work ahead together to continue building the California of the future.”
“We are all committed to delivering an on-time balanced budget and this early action agreement is a critical first step to shrink the state’s shortfall. The Senate will be taking budget votes next week to get this deal across the finish line, and I’m grateful to the governor, speaker, and the entire Senate Budget Committee for their partnership,” said Senate President pro Tempore Mike McGuire (D-North Coast). “Next up: The Senate will be developing our final action budget plan, which we’ll release later this Spring. It will be our road map to tackle the remaining budget deficit and adopting an overall state budget.”
“I’m proud of our Assembly Democratic Caucus for their commitment to a transparent, deliberative budget process. It’s the right way to come at closing such a massive shortfall, along with freezing some undisbursed, one-time spending to preserve more options in June,” said Speaker of the Assembly Robert Rivas. “We expect the Governor to deliver challenging budget proposals next month to reduce the deficit in the long-term, and we’ll consider them carefully. Together, we can deliver real solutions for hardworking Californians.”
The Early Action agreement includes, by category, the following.
Reductions — $3.6 billion; significant issues include:
Salary Savings Sweep from Vacant Positions — $762.5 million.
Withdraw Elimination of Two-week Fee-For-Service Checkwrite Hold — $532.5
million.
School Facility Aid Program — $500 million.
CalWORKs Single Allocation Partial Reversion — $336.6 million.
UCLA Institute of Immunology and Immunotherapy Project — $300 million.
Watershed Climate Resilience — $206.5 million.
Broadband — Loan Loss Reserve — $150 million.
Climate Innovation Program — $100 million.
Foreclosure Intervention Housing Preservation Program — $85 million.
Delays — $3.1 billion; significant issues include:
Formula Transit and Intercity Rail Capital Program — $1 billion.
Preschool, TK and Full-Day Kindergarten Facilities Grant Program — $550 million.
Behavioral Health Bridge Housing — $235 million.
CA Jobs First — $183.3 million.
Vulnerable Community Toxic cleanup — $175 million.
Behavioral Health Continuum Infrastructure Program — $140.4 million.
Diablo Canyon Land Conservation and Economic Development — $110 million.
Broadband Last Mile — $100 million.
Ports and Freight Infrastructure — $100 million.
Clean Energy Reliable Investment Plan — $100 million.
Oroville Pump Storage — $90 million.
Health and Human Services Innovator — $74 million.
Revenue/Borrowing — $5.2 billion; significant issues include:
Managed Care Organization Tax — $3.8 billion.
AIDS Drug Assistance Program Rebate Fund Loan — $500 million (with
commitment to enhance the program in the future).
Balance is primarily other special fund loans.
Fund Shifts — $3.4 billion; Significant Issues Include:
Greenhouse Gas Reduction Fund — $1.8 billion.
Retirement Contribution Reductions Using Prop 2 — $1.3 billion.
Medi-Cal Drug Rebate Special Fund Reserve — $162.7 million.
Employment Training Fund for UI Interest Payment — $100 million.
Deferrals — $2.1 billion total; significant issues include:
Statewide Payroll Deferral — $1.6 billion.
UC and CSU Deferrals — $499.1 million.
Finally, the agreement includes budget language authorizing the administration to freeze additional one-time funding that was included in the 2021, 2022 or 2023 Budget Acts.