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Jan 18, 2023

Highlights From Governor Newsom’s Budget Proposal 2023-24

California Gov. Gavin Newsom recently released his proposed state budget for Fiscal Year 2023-2024, which will soon kick off a months-long deliberation process in the state legislature. The proposed budget is $297 billion with a projected deficit of $22.5 billion. Gov. Newsom prioritizes major commitments that he has set in past years, including those related to education/higher education, homelessness/housing, healthcare, climate change, economic development/small business, and public safety. However, in light of a projected budget deficit, some cuts or funding delays were proposed for various sectors. The California Legislative Analyst’s Office has since conducted an initial review of the budget proposal and suggested that the state’s revenue may be lower than projected. Thus, they recommend that the legislature plan for an even larger budget problem. This update outlines Gov. Newsom’s proposed budget for several priority areas. A link to his office’s fact sheet is provided at the end of the alert.


Healthcare

    1. $844 million towards expanding free health care to low-income undocumented immigrants.
    2. Temporarily transfer $333.4 million from a reserve fund, which is meant for offsetting climbing health insurance premium costs for middle-income families who purchase insurance through Covered California. Federal subsidies were extended until 2025. Governor said money will be returned when Federal funds run out.
    3. $1.2 billion cut to the CA Department of Public Health’s budget, including:
      1. $614 million transfer of COVID-19 emergency relief dollars into General Fund.
      2. $50 million cut from public health workforce training programs over four years (budget maintains $48 million over four years for community-based clinical education rotations for dental students and public health incumbent workforce upskilling and training).
    4. $10.7 billion towards California Advancing and Innovating Medi-Cal (CalAIM).
    5. $215 million towards Community Assistance, Recovery & Empowerment (CARE) Act implementation.

Climate Change

    1. Reduction to $48 million for climate change package. This is a decrease from the $54 billion five-year climate package that the Legislature approved last year. Notably, $3.3 billion of the reduction would come from clean transportation programs ($2.5 billion of which would be from zero-emission incentive programs and infrastructure). This cut includes $3.9 billion in “trigger” cuts that would be reversed if the State determines that there will be enough funds available to cover certain commitments. The trigger cut primarily impacts climate and transportation programs.
    2. $202 million for flood protection.

Homelessness/Housing

    1. $15.3 billion towards homelessness, including $3 billion for flexible aid to local governments (accountability), $3 billion for Homekey, and $262 million for Project Roomkey.
    2. $350 million decrease in overall housing budget (cuts coming from programs for first-time home buyers and support for building ADUs).

Education/Higher Education

    K-12

    1. $108.8 billion total from Proposition 98. Budget includes a Local Control Funding Formula (LCFF) cost-of-living adjustment of 8.13%, which is the “highest cost-of-living adjustment in recent memory.” The funding amounts to $23,723 total per pupil ($17,519 per pupil with just Proposition 98, which is stated to be the highest ever). The proposed budget would fund various programs including:
      1. $690 million to implement the second year of Universal Transitional Kindergarten; and $165 million to support the addition of one additional certificated or classified staff person in transitional kindergarten classrooms serving these students.
      2. $12.5 billion: Learning recovery and learning loss mitigation
      3. $4.7 billion: Children and youth behavioral health
      4. $4.1 billion: Community schools
      5. $4 billion ongoing: Before / after school and summer school
      6. $3.6 billion: Special education
      7. $1.3 billion: Universal school meals
      8. $941 million for arts and music education

    UC and CSU System

      1. In the last approved budget, Governor committed to increasing UC and CSU funding by 5% for five years. This amounts to a $216 million increase for the UC and $227 million for the CSU.
      2. The UC would also receive $30 million to offset the enrollment of fewer non-resident undergraduates with resident students.
      3. Pushes a “debt-free college” framework with:
        1. $4 billion: Student housing
        2. $2.3 billion ongoing: Financial aid – CalGrant
        3. $1.9 billion: Child college savings accounts
        4. $859 million: Middle class scholarships
        5. $293 million: College corps
        6. $115 million: Zero-cost textbooks 

    Economic Development

      1. The Governor continues multi-year investments for various programs, including:
        1. $1.1 billion for the Small Business Credit Initiative
        2. $397.5 million for pandemic-related investments such as the California Venues Grants, Microbusiness COVID-19 Relief Grant programs, and to assist the continued recover of the State’s travel and tourism industry.
      2. However, there are some cuts such as removing $92 million from the California Small Business COVID-19 Relief Grant Program due to declining General Fund revenues (so far, 320,000 small businesses have received grants at an average grant amount of approximately $11,000). The budget also proposes cutting $50 million from the IBank’s Small Business Finance Center and the California Rebuilding Fund, leaving $37.5 million available for financial assistance to small businesses.

    Combatting Fentanyl

      1. $97 million in new investments:
        1. $79 million: Naloxone distribution project
        2. $10 million: Grants for education, testing, recovery, and support services
        3. $4 million: Make test strips more available
        4. $3.5 million: Overdose medication for all middle and high schools

    Click here to read the budget fact sheet.