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!

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. 

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.

Los Angeles, CA – Below is a statement from Peter Manzo, President and CEO, on behalf of United Ways of California (UWCA), regarding the proposed State Budget agreement: 

California is the fifth largest economy in the world and is experiencing an almost $9 billion surplus, so while United Ways of California is pleased that the budget agreement between Governor Brown and the Legislature includes more workers in the state earned income tax credit and funding to address the growing housing and homelessness crisis, we also see missed opportunities for smart and much needed investments in healthcare and expanded early child care.