California legislators were unable to pass the state’s massive $267.8 billion spending plan for 2021-2022 by the June 15 deadline.
Instead, they passed a temporary budget on Monday to keep up negotiations on the bill, and to make sure they get paid.
In a 2010 change to the state constitution, voters enacted a June 15 deadline for state lawmakers to pass a budget or they lose their more than $100,000-per-year salaries. The next deadline is June 30, the end of the state’s fiscal year, when the governor is required to sign a passed budget by that date.
"I’m grateful for the Legislature’s partnership and am confident we will reach a budget agreement that reflects our shared values and keeps California on a sustainable path of recovery and growth," said Gov. Gavin Newsom in response to the stopgap measure.
In May, the governor revised the budget to incorporate the state’s remarkable $75.7 billion surplus and federal funds from the American Rescue Plan Act.
"This is an historic, transformational budget," Newsom said when presenting his May revision. "This is not a budget that plays small ball."
The bill includes additional one-time stimulus checks to Californians earning up to $75,000 a year who did not receive a check from the state’s first round of relief funds. The Employment Development Department would receive $305 million to help clear the backlog of unemployment claims, improve accessibility for foreign language speakers, and improve the direct deposit system. There is $1.5 billion for another round of small business grants up to $25,000.
The budget also includes the largest investment to combat homelessness in the state’s history: $11.87 billion over the next two years. The so-called Big City Mayors coalition urged the state to allocate flexible money for cities to fund housing and homelessness initiatives.
Democrats in the legislature would go even farther than Newsom’s proposal by giving local governments $1 billion per year for combatting homelessness.
The biggest disagreement between Newsom and legislative leaders is not over funding for current programs but over future spending.
State budgeting requires a certain amount of guessing over future income from taxes as a base for spending. Newsom remains cautious about committing to ongoing funding.
"This last year reminds us that we need to plan for the unexpected," he said in a news release. "We must maintain a strong fiscal foundation that does not overcommit the state to long-term spending it cannot afford, which could lead to future cuts."
The Legislature’s version of the budget assumes higher revenues and, therefore, wants to commit to more future spending. It uses the Legislative Analyst Office’s revenue projections, which estimates a future revenue "windfall" of between $12 billion and $40 billion.
According to the Sacramento Bee, Democrats believe their plan will help the state recover from the pandemic by channeling funding to the most vulnerable.
"This is a budget that I believe we will look back at very proudly. It’s an opportunity to invest in our state, not just next year but really for the next 50 years," said Assembly Budget Chair Phil Ting (D-San Francisco). "It helps those that need the help the most."
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