Governor's Proposed FY 2022-23 State Budget
On January 10, the Governor released his January Budget Proposal for 2022-23 and provided an overview of how the $286 billion budget would be spent during a three-hour press conference.
The Governor estimated total revenues of $286.4 billion for 2022-23, an increase of 9.1 percent over the current fiscal year, including $213.1 billion General Fund. The Governor was quick to point out, however, that the Administration’s economic forecast was finalized before the Omicron variant was known.
Another risk to the forecast is the volatile nature of revenue from capital gains, which are a primary source of state funding and are approaching levels previously seen only in 2000 and 2007--right before crashes. The Administration estimates that in the short-term, surging revenues will result in a surplus of $45.7 billion and propose the following allocations:
- $20.6 billion in discretionary funds.
- $16.1 billion required to go to schools and community colleges.
- $3.9 billion to pay down retirement liabilities.
- $5.1 billion to increase budgetary reserves.
The State’s overall reserves would reach $34.6 billion—including $20.9 billion in the rainy day fund, which would be funded up to its constitutional limit.
The major investments areas of the Proposed Budget for 2022-23 include:
- COVID-19, including increased vaccines, testing, and medical personnel.
- Homelessness, including mental health housing and encampments.
- Climate Change, including forest management and drought response.
- Affordability, including healthcare coverage, child care, housing, and small business relief.
- Safer Streets, including local law enforcement grants and gun buybacks.
Of particular interest to counties, the Governor is proposing the following new investments:
• $1.3 billion for additional emergency COVID-19 response.
• $2 billion for homeless behavioral health bridge housing and encampment cleanup.
• $200 million ongoing for local public health infrastructure.
• $1.2 billion over two years for wildfire and forest resilience.
• $247 million for wildfire engines, helicopters and additional fire crews for surge capacity.
• $750 million for drought.
• $2 billion for affordable housing.
• $571 million ongoing for a variety of felony IST solutions.
CSAC's Budget Action Bulletin provides an extensive summary of the proposed State Budget's impact on counties. Urban Counties of California’s summary of the Governor's Proposed Budget can be found here.
The full budget committees in both houses each published documents that highlight the major elements of the Governor’s spending plan: Senate | Assembly Finally, the Legislative Analyst’s Office (LAO) issued its overview assessment of the Governor’s budget here. Key elements of the LAO’s review include its examination of how (and how much) the Governor proposes to allocate discretionary resources, how the budget proposes to address the Gann Limit, as well as a discussion of the major components of the budget.
State Legislation of Interest
On February 9, Governor Newsom signed early budget action trailer bills to address issues related to the ongoing COVID-19 pandemic, including COVID-19 Economic Relief for businesses and a measure that reestablishes a COVID-19 paid sick leave requirement. The new legislation is described below and is now in effect.
• SB 113: Economic Relief Package. This measure creates the small business relief program, includes $6.2 billion in tax relief for businesses that receive Paycheck Protection Program (PPP) loans and regulatory relief and license renewal waivers for heavily impacted businesses. It also includes several taxes changes to benefit businesses.
• SB 114: COVID-19 Paid Supplemental Sick Leave. This measure reestablishes a temporarily and limited paid sick leave requirement on employers with 25 or more employees related to time off from work due to specified COVID-19 infection, vaccination and isolation impacts for employees and their families.
• SB 115: COVID-19 Emergency Response Package: Governor Newsom announced on February 10 that he had signed Senator Skinner's SB 115, a $1.9 billion early action measure to meet the state’s immediate COVID response needs, including funding to boost testing capacity and vaccination efforts, support frontline workers, strengthen the health care system and battle misinformation, with a focus on the hardest-hit communities. The Administration continues to work with the Legislature through the budget process to advance an additional $1.3 billion to support the state’s ongoing pandemic response.
Single Payer Measure Stalls on Assembly Floor
AB 1400, Assembly Member Ash Kalra’s measure to implement single payer in California, was not taken up for a vote on January 31. Given that AB 1400 did not meet the January 31 constitutional deadline for bills introduced in the first year of the session to make it out of the house of origin, the measure is dead. Assembly Member Kalra acknowledged to the press that he was at least 10 votes shy of the 41-vote threshold to move the measure off the floor, which contributed to his decision not to bring the bill up for a vote.
The California Nurses Association – the sponsor of AB 1400 – released a scathing statement after the measure failed to move forward: “…elected leaders in California had the opportunity to put patients first and set an example for the whole country by passing AB 1400... Instead, Assembly Member Ash Kalra, the main author of the bill, chose not to hold a vote on this bill at all, providing cover for those who would have been forced to go on the record about where they stand on guaranteed health care for all people in California.”
Other legislation of interest to the County is included in Attachment A.
The 2022 California Elections report from Nielsen Merksamer is Attachment B.
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