California lawmakers unveil budget rejecting Gavin Newsom spending cuts. Here’s their plan

California lawmakers on Wednesday announced a joint budget plan that would restore some funds for homelessness and social safety net programs while cutting money from state prisons.

The spending proposal from Assembly Speaker Robert Rivas, D-Hollister, and Senate President Pro Tem Mike McGuire, D-Healdsburg, would address the state’s estimated $45 billion budget deficit, but it differs in significant ways from the one Gov. Gavin Newsom presented earlier in the month.

Many of the changes correspond to concerns lawmakers expressed regarding cuts to housing and homelessness initiatives, subsidized child care and social safety net programs that Newsom included in his revised spending plan.

The Legislature must pass a budget by June 15 for lawmakers to receive their paychecks. That budget could serve as a placeholder while leaders continue to negotiate with Newsom. The governor must sign the budget bill by June 27, said Jason Sisney, Assembly budget advisor, in a Thursday Substack post. The new fiscal year starts on July 1.

Rivas said in a statement the legislative plan “restores funding to build more homes, supports K-12 classrooms and rejects many of the cuts that impact our most vulnerable residents.”

The legislative budget would provide $1 billion for another round of Homeless Housing, Assistance and Prevention program grants. Newsom’s budget proposed cutting $260 million in extra funds for the latest round of the program and did not contain money for future grants. Lawmakers also want to reject the governor’s proposed cuts to programs that help fund local housing planning and multifamily rentals for low income residents.

Legislators are pushing to restore funding for some subsidized child care slots after Newsom’s revised budget froze an expansion of the program indefinitely. They also reject some of the governor’s cuts to CalWORKs — the state’s welfare program — and foster care initiatives, in addition to restoring millions in public health dollars Newsom’s revised budget eliminated.

The governor’s spending plan would have stripped billions in Medi-Cal provider rate increases that were to come from a managed care organization tax hike that helps the state draw down additional federal dollars. Legislators instead want to preserve some of the new investments and delay them from Jan. 1, 2025 until Jan. 1, 2026.

As progressive Democrats have suggested, the legislative proposal would cut more funding from the state Department of Corrections and Rehabilitation. The Senate version of the joint legislative plan said lawmakers propose $1 billion in CDCR reductions. The Assembly’s version said this includes “substantial new reductions” and incorporates the governor’s plan to cut more than $80 million by deactivating unused prison beds.

The legislative proposal does preserve some elements of Newsom’s budget. It accepts a plan to suspend net operating loss tax deductions for businesses earning more than $1 million in California and cap business tax credits for three years. But lawmakers would start the suspension and cap in 2024, rather than 2025. The Legislature also supports the governor’s plan to cut state operations budgets and vacant positions.

Newsom recently reached an agreement with the powerful California Teachers Association over education funding that would provide schools with more money in the future, as Politico first reported. Lawmakers did not yet endorse that agreement, with both the Senate and Assembly versions of the budget agreement saying the Legislature “continues to examine the new proposal.”