The California Legislature rejected many of Gov. Gavin Newsom’s budget cuts aimed at addressing a $45 billion deficit, choosing instead to accelerate a temporary tax increase on certain businesses. This move was made to preserve spending on social safety net programs. While the budget approved by lawmakers is not the final spending plan, Newsom and legislative leaders are still in negotiations to fix the shortfall before the new fiscal year on July 1. Lawmakers had to pass a balanced budget by Saturday to avoid forfeiting their salaries, as per a voter-approved rule from 2010.
Newsom’s budget proposal included some smaller cuts that angered his Democratic allies, such as eliminating in-home caretaker payments for disabled immigrants on Medicaid and a housing program for low-income families. To reject these cuts, lawmakers sought additional revenue by speeding up a tax increase proposed by Newsom. The Legislature chose to implement the tax increase earlier than planned, generating an extra $5 billion in income compared to Newsom’s proposal. Lawmakers also identified significant budget cuts in areas like the prison budget and funding for a nuclear power plant.
Senate President Pro Tempore Mike McGuire expressed optimism about reaching a final budget deal by the end of the month. One unresolved issue is the scheduled minimum wage increase for health care workers on July 1, which is expected to cost the state hundreds of millions of dollars. While Newsom aims to delay the wage increase, the Legislature has not yet reached an agreement on the matter. Republicans criticized the budget plan as unsustainable, particularly the tax increase on businesses, which they view as detrimental to the economy. Democratic state Sen. Scott Wiener defended the tax proposal, emphasizing the need for a balanced approach to address the budget challenges.
Overall, the budget approval process highlights the differences between Newsom and the state Legislature, with lawmakers emphasizing the preservation of social programs and finding alternative revenue sources to avoid extensive budget cuts. Despite disagreements, both sides expressed optimism about reaching a final budget deal soon. The unresolved issue of the minimum wage increase for health care workers remains a point of contention, with Newsom pushing for a delay while facing resistance from the Legislature. The budget decisions made by the California Legislature have sparked debate, with Republicans criticizing the tax increase on businesses and Democrats defending it as a necessary measure during a challenging budget year.
