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:
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.
The economic well-being of hundreds of thousands of working Californians hangs in the balance as California’s Budget Conference Committee meets to work out their disagreements for the 2017-2018 budget before final negotiations with Governor Brown. This legislative budget will get us one step closer to determining whether California’s Earned Income Tax Credit (CalEITC) will support self-employed, “gig-economy” workers. Both houses have luckily already agreed that outreach dollars again are needed to build awareness of the CalEITC among the very low-income workers living in poverty and just trying every day to make ends meet.
The CalEITC is a refundable state tax credit that increases the economic security of working families, who can receive as much as $2,706 from the program, depending on their income, in addition to the income boost they receive from the federal EITC.
