California Gov. Gavin Newsom has a $68 billion problem on his hands. What will he do?

Andrew Sheeler
·4 min read
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Good morning and welcome to the A.M. Alert!

IT’S BUDGET DAY. YOU KNOW WHAT THAT MEANS

The Super Bowl is still more than a month away, but the Super Bowl of California politics is happening today!

State lawmakers, policy wonks, lobbyists and journalists all will watch with keen interest as California Gov. Gavin Newsom unveils his proposed 2024-25 budget.

Of special interest is the state’s projected $68 billion deficit, and how the governor proposes to tackle that significant shortfall.

Be sure to check out Sacramento Bee reporter Jenavieve Hatch’s walkup to today’s budget announcement, which details five ways Newsom could address the deficit.

The budget presentation will begin at 10:30 a.m., and if past is prologue, it will likely be a lengthy affair. Bring water and an empty notebook.

Newsom’s budget will have to tackle a myriad of major issues facing the state, including education, housing and homelessness and crime and public safety.

On Tuesday, the Senate Republican Caucus released a preemptive response video of Senate Budget and Fiscal Review Committee Vice Chair Roger Niello, R-Fair Oaks, that warned the governor to work across the aisle and take early action to address the budget gap.

“One thing is certain, when faced with a deficit, the sooner the problem is addressed, the less pain it will cause,” Niello said in the video.

CALIFORNIA IS A LEADING STATE FOR TAX EQUALITY, STUDY SAYS

Via David Lightman...

California is one of six states whose tax system promotes equality among rich, poor and middle class, according to a study released Tuesday by the Institute on Taxation and Economic Policy.

The progressive Washington research group studies state tax systems and rates them with an “inequality index.”

California joined Maine, Minnesota, New Jersey, New York and Vermont as states that the group said “narrow the gap between lower- and middle-income taxpayers and upper-income taxpayers, making the distribution of income more equal after collecting state and local taxes.”

For instance, California taxpayers with the lowest 20% of incomes, those making less than $25,000, pay an average of 11.7% of their earnings in state and local taxes. The wealthiest 1%, whose incomes average $2.1 million, pay 12%.

Much of the reason for the equal distribution of the tax burden is the result of the state’s income tax, which taxes lower incomes at a lower rates. It taxes millionaires at rates ranging up to 13.3%.

There’s more inequality, though, in what the rich and less wealthy pay in sales and property taxes.

The lowest 20% of earners pay an average of 5.4% of their income in property taxes, for instance, while the wealthiest pay 0.4%.

PLANNED PARENTHOOD SCORES THE LEGISLATURE

As it does every year, Planned Parenthood Affiliates of California released a report scoring state lawmakers based on how they voted on the organization’s priority bills the year prior.

The scorecard looks at votes on seven bills, plus the budget.

They include AB 352, the bill to enhance privacy protection for patients who undergo abortions or experience a pregnancy loss; AB 576, which requires Medi-Cal to provide 100% reimbursement for medication abortions; and AB 1707, which shields California reproductive health care providers from prosecution by states hostile toward abortion rights.

Unsurprisingly, most Democrats scored a 100%. Perhaps more surprisingly, one Republican, Assemblyman Greg Wallis, also got a 100% from Planned Parenthood.

The only Democrats not to get a 100% were Assemblyman Chris Holden (90%) and Sen. Marie Alvarado-Gil (88%).

QUOTE OF THE DAY

“This state’s fiscal recovery demands immediate, disciplined action. Californians deserve nothing less.”

- Sen. Roger Niello, R-Fair Oaks, in a statement anticipating Gov. Gavin Newsom’s 2024-25 budget.

Best of The Bee:

  • Gov. Gavin Newsom on Wednesday morning will detail his proposed budget for the 2024-25 fiscal year, but the unveiling looms as a somber affair as he delivers it with a $68 billion deficit, via Jenavieve Hatch.

  • 10 days of hell in Sacramento jail: Lawsuit says inmate died after pleas for help ignored, via Sam Stanton.

  • Days after California became the first state in the nation to offer Medi-Cal to all low-income undocumented residents, a Republican lawmaker introduced a controversial measure to stop future health care funding for the group, via Mathew Miranda.

  • Two-thirds of Covered California enrollees — nearly 1.1 million people — qualify for comprehensive health plans with premiums of $10 or less each month. Cost should never be a barrier to accessing health care, particularly primary care, Covered California Executive Director Jessica Altman said. That’s why state leaders have opted to focus on reducing deductibles, co-pays and other out-of-pocket expenses, via Cathie Anderson.

  • A California Democrat is renewing his efforts to tax wealthy residents’ net worth as a potential solution to closing the state’s $68 billion spending gap, via Lindsey Holden.