Governor Newsom’s 2023 May Revise Budget 

Key Investments Brief for UWCA Members

Statement from Pete Manzo, President & CEO, UWCA

As the state navigates this year’s budget challenges, it is imperative we safeguard and bolster investments in our safety net to protect our most vulnerable communities. California’s current budget deficit is now at $31.5 billion, about $9 billion more than the $22.5 billion deficit that was estimated in January. We call on Governor Newsom to continue working with the California State Legislature to make targeted investments in what we know works to uplift California families who are struggling with the rising cost of living. 

The economic uncertainty we are experiencing is not unfamiliar to our state, having weathered downturns and deficits before. Part of the challenge for California’s revenues is our overreliance on income taxes which are known to be volatile. In the last two years, California experienced record revenues and had incredible opportunities to prioritize struggling families. While strides were made, many of them were one-time in nature, like the Middle Class Tax Refund. Even as our revenues are down again, the opportunity to make ongoing investments in equity-based programs such as refundable tax credits, expanding child care rates, and affordable housing remain paramount to our state’s well-being. 

This May Revision stands in stark contrast to the budget of one year ago when COVID-19 first threw the Governor's budget proposal into disarray. Compared to a projected budget deficit of $54 billion a year ago, the state now has a projected $75.7 billion surplus. Combined with over $25 billion in federal relief, this supports a $100 billion California Comeback Plan—a once-in-a-lifetime opportunity to not only speed the state's recovery from the pandemic, but to address long-standing challenges and provide opportunity for every California family—regardless of their income, race, or ZIP code. 

In this blog post, we will go over key investments in:

• Education: including childcare, higher education and a new “14th” grade established by the creation of universal transitional kindergarten.  

• Housing & Homeless: A $9.3 billion package for housing and $6.8 billion for homelessness.

• Health & Human Services: including the brand new expansion of Medi-Cal to undocumented seniors aged 60 and over. 

• Golden State Stimulus & Rent Relief: $8 billion in Golden State Stimulus payments to Californians earning less than $75,000 annually, including to immigrants who are undocumented. $5.2 billion for emergency rental assistance and back rent owed by Californians with low incomes.

• Emergency Preparedness & Responses, Small Business Relief, and more!

After two-months of deliberations, President Biden recently signed into law a $1.86 trillion COVID-19 relief package (HR 1319) that reflects key components of his American Rescue Plan. 

In a major victory for California’s counties, the final legislation includes robust, direct, and flexible federal COVID-19-related financial support to all counties. Pursuant to the bill, counties across America will receive a total of $65.1 billion, with funds allocated based on population. According to preliminary estimates, California counties are projected to receive at least $7.6 billion. 

Key Investments Brief for UWCA Members

Executive Summary

On January 8, 2021, Governor Newsom unveiled his proposed 2021-2022 budget, amounting to a $227 billion spending plan, thanks in large part to an estimated $26 billion windfall in tax revenues according to the Legislative Analyst’s Office estimates from November 2020. The Budget closes a $54.3 billion gap in 2020-21 and significantly reduces the state’s ongoing structural deficit to $8.7 billion in 2021-22, after accounting for reserves. 

The dozen ballot measures Californians weighed in on this month were a multitude of reforms addressing everything from corporate taxation, rent control, criminal justice to other topics. As a network United Ways of California endorsed Propositions 15, 16, 17, and 25. Though only one of these measures received enough support to pass, we will continue to work with state and city electeds and partner organizations to help advance the common good for every individual in every community. Please find our post-election analyses of each propoistion we endorsed down below. 

Children’s health coverage is critical in ensuring kids are on the path to succeed in school and in life. We know that when children have access to comprehensive quality care, they are healthier and more likely to enter school ready to learn and reach graduation. Overall, California has made huge strides in recent decades to ensure more families and children are healthy and excel in life, particularly by increasing access to health coverage. In fact, we reduced the number of uninsured children from 2 million in 1999 to just over 300,000 in 2016. However, despite steady coverage gains up to 2016, recently published data by the Center for Children & Families of the Georgetown University Health Policy Institute show that too many children are losing ground on this critical factor and therefore cannot access regular and preventative health care in California and across the U.S.

After years of tireless organizing to expand the California Earned Income Tax Credit (CalEITC) to income-eligible workers; ALL immigrant tax filers are now included. Follow us as we share the greatest hits from the CalEITC Coalition in our way to make it for all.

With the passage of the new statewide eviction moratorium - the Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020 (AB 3088) - Californians across the state are all scrambling to understand what the law means for them. This is a critical period for California where tens of thousands of people are at risk of homelessness if they are not properly informed of their rights as tenants. 

In order to address this, UWCA is working with a number of legal aid and tenants rights groups on a newly launched text “RentSOS to 211-211” campaign. This will help tenants understand what steps they need to take to stay housed and access resources to support them.

We strongly encourage you to use and refer people seeking updated information to text "RentSOS" to 211-211. Once individuals text "RentSOS"to 211-211, they will: 

• Receive information on their rights as tenants, 
• Be directed to a resource directory for legal aid in their county, and;
• Be provided with important documentation that may be needed for legal protections under the law

We will continue to consult with legal aid experts and the State Administration on the content to ensure timely and accurate information.

Although this is the final agreed upon budget, this agreement only avoids steep cuts to education and safety net programs until next year. Negotiations went better than expected as both Governor Newsom and the Legislature were encouraged by tax revenues which came in about $1 billion ahead of prior dismal May projections. This final version is very similar to the Legislative Version that passed on June 15th. 

This final version does not rely on additional Rainy Day Funds, Safety Net Reserve Funds, or the PERS deferral that were included in the Legislature’s version if additional federal funds did not materialize. Instead, it relies upon updated baseline forecast adjustments to revenues and expenditures and an increased Prop 98 deferral. $14 billion in additional funding would be appropriated if the State receives federal funding by October 15.   

Note: Although this is the final agreed upon budget, the Governor may still exercise line item vetoes in trailer bills. 

In January, California was propelling the American economic resurgence—with 118 consecutive months of growth, stratospheric job creation, and its highest credit rating in nearly two decades. Because of prudent one-time investments which enabled the state to attain the largest rainy day fund in its history,  California in a far stronger fiscal position today than it has been during previous downturns. 

In this blog post, we will go over:

• California's economic outlook prior to the COVID-19 induced recession.
• The rationale for this year's May Revise and projected budget cuts.
• An in depth analysis of areas most important to our members, including: education & child care, financial stability, health, as well as housing & homelessness; and,
• The State's Economic Outlook for the Future.

This past week, Governor Newsome signed four new executive orders that will:

• Wage Garnishment & Student Loan Protections: Exempt garnishment for any individuals receiving federal, state or local government financial assistance in response to the COVID-19 pandemic. This includes recovery rebates under the CARES Act. Funds may still be garnished for child support, family support, spousal support or criminal restitution for victims. The Governor also announced a new initiative for students with commercially owned Federal Family Education Loan or privately held student loans who are struggling to make payments due to the COVID-19 pandemic which now may also be eligible for expanded relief. Relief options include providing a minimum of 90 days forbearance, waiving late payment fees, ensuring that no borrower is subject to negative credit reporting, and helping eligible borrowers enroll in other assistance programs.The text of the Governor’s executive order can be found here and a copy can be found here.
• School Transparency: Empower schools to focus on responding to COVID-19 and to provide transparency to their communities.The order extends the deadlines for local educational agencies to submit Local Control and Accountability Plans (LCAP), which are multi-year planning documents tied to budget projections. By law, LCAPs must be developed in collaboration with parents, students, teachers, and community groups. Given the COVID-19 pandemic, school leaders are appropriately focused on managing the immediate needs of their students and families.

This past week Govenror Newsom signed 6 new executive, ranging from juvenile justice to the establishment of a new task force on economic recovery.  

• Task Force on Business and Jobs Recovery: Bringing together leaders across California’s diverse, innovative economic and social sectors to chart a path forward on recovery in the wake of COVID-19, Governor Gavin Newsom announced the formation of a state Task Force on Business and Jobs Recovery. The Task Force will be co-chaired by Governor Newsom’s Chief of Staff Ann O’Leary and philanthropist, environmentalist and businessman Tom Steyer, who was also appointed Chief Advisor to the Governor on Business and Jobs Recovery. He will receive no compensation for his service.

• Members of the Task Force include Senate President pro Tempore Toni Atkins, Assembly Speaker Anthony Rendon, Senate Minority Leader Shannon Grove, Assembly Minority Leader Marie Waldron, former Federal Reserve Chair Janet Yellen, Walt Disney Company Executive Chairman Bob Iger, former head of the Small Business Administration Aida Álvarez and dozens of prominent leaders in business, labor, health care, academia and philanthropy.

Changes to California's SNAP Program 

California has officially been approved to allow food stamp recipients to buy groceries online. 

California will be allowed to participate in an ongoing pilot program experimenting with giving Supplemental Nutrition Assistance Program recipients the option to use their benefits to shop for groceries online. This will allow nearly 5 million more people to use online shopping services that often include delivery. 

California is expected to launch its SNAP online program by the end of the month.

Updates from the California Legislature

New Executive Orders

This past week Governor Newsom issued 7 new executive orders:

Child Care: Will facilitate child care for children of essential critical infrastructure workers by allowing the California Department of Education and California Department of Social Services the flexibility to waive certain programmatic and administrative requirements in response to the COVID-19 pandemic. The waivers will focus on current eligibility and enrollment priorities that prevent child care and afterschool programs from serving children of essential infrastructure workers. The waiver will allow eligibility for child care to prioritize essential workers, including health care professionals, emergency response personnel, law enforcement, and grocery workers.

Additionally, the order states that the Department of Education and the Department of Social Services shall jointly develop and issue guidance on how the essential worker prioritization will roll out, as well as guidance on how child care programs and providers can safely provide care. This guidance will be issued no later than April 7, 2020.

Priority for abused and neglected children will not be impacted.

The order also allows the state to take advantage of new federal flexibility to provide pandemic Supplemental Nutrition Assistance Program (SNAP) benefits to children. Specifically, the California Department of Social Services and the California Department of Education will share data and information to identify students who may be eligible for the pandemic SNAP benefit, to reduce food insecurity and ensure children receive nutritious meals at low or no cost.

This past week, Governor Newsom issued 3 new executive orders. 

Statewide Rental Eviction Moratorium: California landlords will not be able to evict tenants while the state fights coronavirus. The ban will be in place through May 31, 2020. The moratorium allows tenants who cannot pay their rent because of COVID-19, the disease caused by the coronavirus spreading through the state. It requires tenants to declare in writing that they can’t pay their rent because of the pandemic within a week after their rent was due.

State Prisons & Juvenile Facilities: Meant to reduce the risks of COVID-19 in correctional settings, this order directs the California Department of Corrections and Rehabilitation (CDCR) Secretary to temporarily halt the intake and/or transfer of inmates and youth into the state’s 35 prisons and four youth correctional facilities. Those inmates and youth will remain in county custody for the next 30 days. This period can be extended if needed. This action builds on the state and local correctional and public safety leaders’ longstanding partnership, to protect public health and safety in the context of the COVID-19 crisis. 

Judicial Council Emergency Authority: Specifically, the executive order empowers the Judicial Council and the Chief Justice of the California Supreme Court to take necessary action to be able to conduct business and continue to operate while responding to the COVID-19 pandemic. The order allows the Judicial Branch to allow for remote depositions in every case (the law had previously required that parties be deposed in person) and electronic service of process. Additionally, the order leaves the Judicial Branch discretion to make any modifications to legal practice and procedure it deems necessary in order to continue conducting business.

Last Friday, President Trump signed into law the largest stimulus bill in American history, the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act will provide billions of dollars of relief to individuals, businesses, state and local governments, and the health care system suffering the impact of the COVID-19 coronavirus in the United States. Although the program's price tag is $2.2 trillion, the economic impact is expected to approach nearly $7 trillion over the course of several economic cycles. Some of the key provisions include:

One-Time Financial Relief Payments

• All U.S. residents (meaning those that file with an ITIN are excluded, unless they have military service) with adjusted gross income up to $75,000 ($150,000 for married couples) would get a $1,200 ($2,400 for couples) “rebate” payment. They are also eligible for an additional $500 per qualifying child. The payments would start phasing out for earners above those income thresholds and would not go to single filers earning more than $99,000; head-of-household filers with one child, more than $146,500; and more than $198,000 for joint filers with no children.

• The federal government will use previous tax information to determine the amount tax units will receive. If the Internal Revenue Service already has bank account information for a tax unit, it will transfer the money via direct deposit based on the recent income-tax figures it has (2018 or 2019 if filed already).
• People who don’t pay taxes, such as those with very low incomes, may be hard to reach the way the program is designed.
• An excellent FAQ article by the New York Times that goes into greater detail can be found HERE.