Legislative analyst says Newsom has $38B surplus, not $76B

By Cole Lauterbach  | The Center Square contributor

(The Center Square) – A state office reviewed California Gov. Gavin Newsom’s proposed “May Revision” budget proposal and found there’s only half of the expected budget surplus Newsom’s promoting. 

The California Legislative Analyst’s Office, a nonpartisan state department, released its impressions on Newsom’s budget this week. Most notably, the report said Newsom has overestimated the $76 billion in extra cash the state’s got to play with. 

The office said Newsom’s budget uses required spending as a part of the surplus, something that’s not usually counted as extra spending.

“The Governor’s estimate includes constitutionally required spending on schools and community colleges, reserves, and debt payments,” said Gabriel Petek, a legislative analyst with LAO. “We do not consider these spending amounts part of the surplus because they must be allocated to specified purposes.”

They believe the surplus is $38 billion. 

Despite the glut of revenue, the analysis said Newsom’s proposal relies on $12 billion from the state’s rainy day fund, something LAO discouraged.

“The state will need these tools to respond to future challenges, when federal assistance might not be as significant,” Petek said.

The office also suggested the Assembly take its time with what likely will be an expansive set of bills that create roughly 400 new proposals.

The report delves into the Gann Amendment of the state’s constitution and how Newsom must spend some of the surplus in ways that are considered taxpayer rebates. Newsom estimated he must spend $16.2 billion on these rebates, $8.1 billion of which would go directly to taxpayers with incomes under $75,000 in the form of stimulus checks. The rest goes unallocated, though he has two years to satisfy the second half of the requirement. 

Newsom relied on legislative changes, which aren’t guaranteed, to increase the state appropriation limit, Petek said, in addition to changes his office can make unilaterally. 

Newsom, who is facing a recall sometime in November, announced his expansive budget as the pathway to get California on a path to recovery from the COVID-19 pandemic. 

The governor and Assembly have until June 15 to enact a budget. 

Source: The Center Square

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