Governor Releases Proposed State Budget
This morning, Governor Newsom released his proposed State Budget for the 2020-21 fiscal year. The Governor’s Budget focuses on health care affordability, homelessness, housing affordability, as well as addressing the issues of climate change, which includes wildfires. This is a conservative budget with few large ongoing new programs and significant contributions to the State’s reserve accounts.
Topline
The Budget capitalizes on additional revenues, but recognizes a decline in the most recent economic expansion. The Budget proposes to increase overall reserves, which are projected to total $21 billion. The Budget also projects that if there were a moderate recession in the next three years, there could be an up to $70 billion General Fund revenue loss during the same period. If this were to happen, the General Fund budget deficit, however, would be only approximately $40 billion because of automatic spending cuts to programs such as Proposition 98.