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. 

We urge the Governor to increase both the Renter’s Tax Credit and the California Earned Income Tax Credit, as outlined in the Senate’s Budget Plan. Tax credits are the most effective tool we have to combat poverty and help families afford basic necessities. As the cost of living continues to increase, spurred on primarily by housing and childcare costs, California needs to step up to prioritize children and families on the brink of poverty. We urge the Governor to ensure that investments like the ones outlined in the Senate Budget Plan and held within AB 1498 (Gipson) and AB 1128 (Santiago) are included in the final budget deal negotiated in the coming six weeks.

While we agree with the Governor that the economic realities our state faces will result in difficult decisions needing to be made, we believe the budget cannot be balanced on the backs of working families. Specifically, the Governor failed to include a proposal to include unemployment benefits for excluded immigrant workers. Considering an estimated 20% of all Californians under 18 live with an undocumented family member or are undocumented themselves, California should not continue to rely on piecemeal, one-time programs for undocumented Californians in times of crisis when our state is so interconnected and interdependent.

Further, as communities contend with continued disasters, such as flooding, and the continued impacts of climate change, we strongly urge the Legislature and Governor to invest in the 211 system as a statewide resource for all California residents who need access to health and human service information and resources, as well as critical infrastructure support during disasters. Recent floods have shown just how vital the 211 system is to link Californians to assistance for housing/rent relief, food, among other critical resources. 

Finally, we are very supportive of the Governor’s prioritization of the following proposed investments:

• Keeping the commitment made in the January Budget to expand Medi-Cal to all income-eligible adults, regardless of immigration status
• Maintaining $3.4 billion in funding proposed for homelessness programs
• Investing an additional $110 million to continue supporting Universal School Meals
• Adding $290 million for a flood risk reduction package to reduce flood risk
• Extending family fee waivers to September 2023 and help provide nearly $170 million to provide stipends to state-subsidized child care providers.

United Ways of California will continue our work with the Legislature and Governor to pass a final budget that protects children, their families, our communities, and our future. 

Executive Summary

Last Friday, Governor Gavin Newsom released his much anticipated May Revise, amounting to a $224 billion budget and containing a $31.5 billion shortfall. The updated revenue estimate is not the final estimate as a result of the extension of tax payment deadlines for most Californians into October, giving estimators less complete information about the state’s revenue situation than they usually have at this point in the year.