California Legislature Passes State Budget

Today, the Legislature passed a state budget attempting to account for a projected $54 billion deficit caused by the COVID-19 pandemic. The vote is largely a formality, however, as a few key elements are missing, including:

  • Total revenue the state will bring in as the tax deadline was pushed to July 15;
  • How much further aid, if any, the federal government will provide the state; and
  • Agreement with Governor Gavin Newsom.

Pursuant to 2010 initiative approved by the voters, lawmakers are required to pass a budget by June 15 to continue or risk losing their salary. There is no requirement of an agreement between the Legislature and the Governor.

The budget passed today reflects an agreement the Senate and Assembly reached earlier this month, which rejects many of the Governor’s proposed cuts. The Senate and Assembly will now negotiate with the Governor to reach consensus on several significant points of disagreement:

  • The Governor has proposed $14 billion in cuts from schools, health care and safety net programs unless the federal government sends funds by July 1. The Legislature’s budget flips the presumption, and instead assumes federal funding will arrive, and if it doesn’t arrive by October 1, limits cuts to $7 billion by drawing on reserves.
  • The Legislature’s budget rejects several proposed cuts to programs by the Governor, including cuts to affordable housing programs and the California State Universities and University of California systems.
  • The Legislature’s budget rejects the Governor’s proposed 10% pay cut to all state employees and rather defers this to the union negotiation process.

Lawmakers have acknowledged they will need to make changes to budget passed today as negotiations with the Governor continue and the state’s economic situation becomes clearer. It is expected an additional budget bill or bills will be agreed upon between now and July 1, the beginning of the state’s fiscal year. This will be followed by one or more additional budget bills in July and August, after the delayed July 15 tax deadline has passed, and lawmakers have much clearer picture of the state’s fiscal outlook. View Update

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