California Governor Gavin Newsom released his January budget proposal for the 2023-24 fiscal year Tuesday.
The proposal accounts for a projected $22.5 billion “budget gap,” or deficit, a major change from the $100 billion surplus the state saw in its last budget. According to Jeffrey Cummins, a Fresno State University political science professor who studies California politics, this is the biggest “swing” the state has ever seen.
“Revenues for the coming fiscal year are significantly lower than previously anticipated — mainly due to declines in withholding and capital gains taxes, which are inherently volatile,” Newsom said in a letter addressed to the State Assembly and Senate. “But with careful planning and (the Assembly and Senate) partnership, we find ourselves in a strong position to withstand this dip in revenues while maintaining funding for programs and services that are relied on by millions of Californians.”
Former State Assembly member and campus political science lecturer Ted Lempert said the state’s budget is more “volatile” than other states because of its strong reliance on the stock market and especially capital gains tax.
To deal with the deficit, according to Lempert, many one-time funds will be delayed. This includes funding for UC Berkeley’s planned transition to entirely clean energy. Lempert also said that last year’s budget put an unusual emphasis on one-time funding, “to the chagrin of many of us.”
Newsom outlined several other projects in the proposal, including implementing universal transitional kindergarten and providing two free school meals a day per student, as well as continued funding for housing and homelessness. This will include aid to local governments, the Homekey effort, encampment resolution grants, Project Roomkey and more, according to the state’s budget fact sheet.
For higher education, the budget proposal includes a 5% base increase in funding for the UC and CSU systems, as stipulated in the existing multi-year compacts between the state and its institutions of higher education.
“At this time of declining state revenues, (Newsom’s) support for the University and our students is truly extraordinary,” UC President Michael Drake wrote in a statement addressing the proposal. “We are grateful for his continued support of the University.”
Cummins noted that past deficit years have often seen budgets that included cuts to higher education and increases in tuition, which have elicited “strong” reactions.
He called the increase “a bit surprising” but also noted that considering inflation, it is not extremely significant.
“It’s not going to keep up with inflation, so you’re pretty much at a status quo,” Cummins said. “You’re not going to be able to increase the number of students served when you have to pay more to serve the same number of students … you’re not going to be turning away students but you’re not also going to be increasing enrollments.”
Cummins also said the California budget is “notoriously” hard to predict, so there may be changes between now and Newsom’s revised proposal in May.
Until then, according to Lempert, the legislature will be picking apart the budget and holding hearings, testimonies and committee discussions on the various proposals.
“It’s important to note that it’s just a January proposal,” Lempert said. “In May we’ll have a better sense of the economy … so you’ll see a somewhat different proposal in May, and then the legislature will weigh in. The legislature has been supportive of higher ed as well so my sense is the legislature would be supportive of this increase and that’s not likely to change.”