Critics argue the legislature’s new $300 billion budget is unsustainable

Mathematically speaking, long-term projects on the Californian legislature’s newly-passed budget can survive only to 2023. By the end of June, both parties must agree on a finalized state budget; most Democrats are pushing for expansive projects and stimulus-type payouts, while Republicans and Gov. Newsom want realistically fundable options. Evan Symon of the California Globe discusses this “tale of two budgets” and its implications for our economic stability.

But, with a recession anticipated sometime next year, the Governor, Democrats, and Republicans are at odds over what exactly the budget should go toward in the long run, especially after surplus funds dry up. While the legislature’s plan would increase the state’s budget reserves to around $38 billion, both the Governor and legislative Republicans want more put away for a rainy day. The biggest stress point currently dividing everyone, is what to do about how much should be returned to California taxpayers.

Under Newsom’s $18.1 billion plan, $11.5 billion would go directly back to all auto-owning Californians through $400 checks similar to the $600 Golden State Stimulus checks released last year. Qualified low income tenants who requested rental assistance before March 31st would also be eligible to receive a small part of the $2.7 billion emergency rental assistance plan Newsom has as part of the package. This part would be only allowed for rent relief. Another part of the package would have $1,4 billion toward helping pay past due utility bills. $1.2 billion of that would specifically go toward electricity bills, with another $200 million for water bills. Diesel fuel tax would also be suspended for a year, costing the state $439 million, with $750 million going to free public transit to those who didn’t get car-ownership based checks.

However, the Legislature’s plan would only return $10 billion to Californians, with $8 billion going toward rebates not based on car-ownership like Newsom’s plan; $1.3 billion for small businesses; and $600 million in tax credits for low-income residents and workers who pay union dues. Republicans, meanwhile, continue to support a gas tax holiday, more water storage investments, and lowered costs for renters, among other budgetary requests.

With the Legislature’s budget proposal release on Monday, two days before the June 15th deadline, which would have seen them forfeit their salaries for a year if they didn’t pass it by the deadline, the Governor and both houses now have roughly half a month to agree on a budget before the July 1st deadline. While most legislative Democrats continue to push for longer-lasting projects whose expenses will not be covered by the surplus past 2023, the Governor, Republicans, and other Democrats are pushing for a budget with more short-term projects that can be adequately covered by the surplus with the anticipation of seeing where spending will be next year with new state income amount, likely without a surplus.

This article originally appeared in the California Policy Center. Read the whole thing here.

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