California’s Budget – When There’s Too Much of a Good Thing

The state’s budget for fiscal year 2021-2022, which began on July 1, amounts to $262.6 billion. Unprecedented by a $76 billion state surplus and $27 billion in federal aid, the record-busting budget reflects new agreements between state legislators and Governor Newsom.

The windfall of funds came into state coffers primarily from California’s progressive tax model on its top earners (i.e., tech companies), professionals who were able to continue working during the state’s COVID-19 closures, and a surging stock market. And while the news of a surplus is welcomed by all, it complicates a process in which stakeholders must balance any new commitments with what can be sustained down the road.

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Following a state constitutional mandate to “pass” a budget by June 15 to enable lawmakers to keep getting paid, what initially got passed was a bevy of placeholder bills populated with trailer language describing the legislative intent for each bill. Even with the enormity of this year’s budget dollars — or because of it — the placeholders were necessary to give time for lawmakers and the Governor to negotiate their priorities and reach agreements on spending levels.

Aiming to address some of the most urgent challenges facing the state, such as preventing wildfires, alleviating drought-induced challenges, and mitigating dangers posed by climate change, the budget also includes a big expansion in healthcare.

Of significance during this budget cycle is the Democrats’ years-long effort to allow unauthorized immigrants to participate in the state-funded healthcare program for low-income residents. Toward that end, lawmakers agreed to offer expanded Medi-Cal health insurance coverage to undocumented residents age 50 and older. Previous budgets have opened the program to undocumented children, followed by young adults as old as 26. This will make California the first state in the nation to provide government health insurance to undocumented immigrants at age 50. This moves California another step toward universal healthcare. Will it hold? Time and future budgets will tell.

As the pandemic has colored almost every situation, so it has the state budget negotiations. As local public health departments have come under enormous stress throughout the pandemic, lawmakers proposed at least $200 million of surplus funds go to annual new funding for these departments and agencies. The extra money would go toward hiring more public health workers, buying new equipment, and modernizing computer systems. 

Gabriela Villanueva is CAP’s Government & External Affairs Specialist. Questions or comments related to this article should be directed to