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.