Saturday, May 25, 2024

Newsom Nixes Climate Programs as Budget Bonanza Plunges to Deficit

Must read

Gov. Gavin Newsom has been widely lauded for his leadership in combatting climate change, making moves that have included shifting California toward zero-emission vehicles. But after inflation sunk a massive budget surplus and the state is facing a projected $22.5 billion deficit in the upcoming fiscal year, Newsom announced on Tuesday that major climate change programs will be cut.

This deficit and the cuts it will bring are a far cry from the big-eyed bonanza that came after the projected budget, a bounteous near-$100 billion surplus for the current budget year, was announced in May.

“No other state in American history has ever experienced a surplus as large as this,” Newsom said at a May news conference, according to the Los Angeles Times. Back then, Newsom created a document full of ideas on how to use all the extra cash, including the expansion of medical care eligibility to all immigrants in 2024, paid family leave, free preschool for 4-year-olds, and a boost in the earned income tax credit. And there was, of course, the stimulus package to help Californians face pumps with sky-high gas prices.

California has seen a decade of healthy budgets that are often surpluses. But this year, all that extra money projected in the spring disappeared as inflation ballooned, a recession loomed, and interest rates inched upward. Mere months after the state’s historic surplus, a $25 million deficit was projected by the Legislative Analyst’s Office by November 2023, the L.A. Times reported.

Currently, Newsom’s $297-billion budget plan for 2023-24 juggles the money it will have in its coffers by “delaying multi-year investments and shifting funding to bonds to offset the shortfall;” Newsroom notes that he was careful not to touch what he’s long held as important: The state’s rainy day fund and other reserves; in total, California has $35.6 billion in reserves.

The climate cuts will move $4.3 billion in spending on zero-emission vehicles from the state’s taxpayer-funded general fund to a special fund, reports the AP;$3.1 billion in funding for climate and transportation will be delayed by a year.

“That makes us very mindful of the uncertainty of this next calendar year, and as a consequence of that we’re not touching the reserves, because we have a wait-and-see approach to this budget,” Newsom said, adding that he felt that California was in a better place than other states to survive a recession.

However, the governor and the legislature already committed to expensive new programs while in better times. His overall spending plan is just $10.9 billion under what was allocated in the current budget year. Newsom is set to release a revised budget in May.

Newsom said that California will continue spending in support of education, fighting climate change, and health care—including expanding Medi-Cal, homelessness, and growing the housing supply, while continuing with response to drought and wildfire.

“We’re keeping our promises,” he said.

Stay on top of the latest in L.A. news, food, and culture. Sign up for our newsletters today.

More articles

Latest article