10 Ways to Make Governor Newsom’s Proposed Budget More Equitable

Governor Gavin Newsom released the May Revision to his proposed 2021–22 state budget — also known as his “California Comeback Plan” — and much attention is being given to the number of proposals and large dollar amounts. The governor’s latest proposal and the economic position California finds itself in today are striking given the global pandemic and recession.

California’s state leaders have more than $100 billion in funds available to be invested over the current budget, and future years. Broken down, the Newsom administration is projecting $75.7 billion in additional revenues over the current fiscal year (2020–21) and budget year. This includes $38.1 billion in discretionary funds and $37.6 billion in constitutionally required obligations for K-12 schools and community colleges, as well as for reserves and paying down certain long-term liabilities. Adding to that, state leaders have $27 billion in direct federal aid from the American Rescue Plan.

The question all Californians should ask state leaders: Will policymakers seize this opportunity to make bold investments that create a more equitable California where all people can thrive regardless of age, race, or zip code?

To be sure, Governor Newsom’s revised budget uses much of the state’s windfall gains to help Californians with low and middle incomes and people of color, such as through direct cash aid, rental assistance, and utility debt assistance. But these are largely one-time investments.

Ongoing support is critical for the state and its people to truly move forward.

California’s large revenue gains are driven by high-income Californians and corporations thriving amid the COVID-19 pandemic, while millions of Californians with low and middle incomes have struggled to pay the rent and put food on the table as a result of lost employment and income. Millions more have been struggling to balance the pressures of work, caregiving, physical and mental health, and educating their kids for the past 15 months. Federal and state cash assistance has helped to mitigate more dire expectations of economic decline from layoffs, evictions, and closures of small businesses and nonprofits.

Economic struggles remain for the vast majority of Californians.

Now, with so much funding available state leaders have an opportunity to do so much more for Californians.

Here are 10 ways that state leaders can make the 2021–22 budget even more equitable.

  • Provide ongoing funding for local public health departments that have requested $200 million in ongoing support to rebuild workforce and infrastructure before the next public health crisis and help advance health equity.
  • Target more aid to undocumented Californians with low and moderate incomes through additional cash payments. These Californians and their families were excluded from thousands of dollars in federal relief checks. The state can replace the federal relief dollars undocumented Californians and their families were denied with a $1.8 billion investment.
  • Increase funding for homelessness to at least $20 billion (from $12 billion) over 5 years (from 2 years), as proposed by the Legislature, and provide flexible and ongoing funding to sustain both new projects and existing effective local efforts.
  • Extend eligibility for comprehensive Medi-Cal to all undocumented Californians, covering those ages 26 to 59 left out of the governor’s proposal and putting an end to racist and exclusionary policies that block millions of Californians from accessing vital health services, at an additional state cost of about $1 billion.
  • Expand access to food assistance to serve Californians regardless of immigration status. This can be done through the California Food Assistance Program which currently provides food benefits for some non-undocumented immigrant Californians. This would move the state forward in addressing the disparity in basic nutrition support available to undocumented Californians and their families.
  • Ensure child care providers are paid fairly by reforming reimbursement rates. Thousands of child care providers care for children via the subsidized child care and development system while receiving meager wages from the state. Given the number of children currently served in subsidized programs, updating to just 2018 rate levels would cost approximately $227 million.
  • Maintain payment rates for workers who rely on California’s paid family leave and state disability insurance programs for their family care needs. Without action, the payment rates will decrease at the end of the year, further blocking California workers with low wages from paid time off to care for themselves or a family member.
  • Eliminate poorly targeted tax give-aways that primarily benefit large corporations, including the proposed expansion of the California Competes Tax Credit and Film Tax Credit.
  • Reject the proposal to deposit $1.1 billion into California’s unemployment insurance (UI) trust fund. This would provide a poorly targeted tax break to businesses that were not paying enough into the UI system before the pandemic at the expense of helping Californians most harmed by the economic crisis who need financial support now.
  • Close more state prisons, which disproportionately harm Black and brown Californians and waste state resources. Closing five prisons could generate state savings of around $1 billion, which could be reallocated to promote rehabilitation, reduce poverty, and strengthen families and communities, particularly Black and Latinx communities that have long faced discrimination at the hands of the justice system.

California’s state leaders have a once-in-a-lifetime opportunity to make bolder investments to create a more equitable California. The policies state leaders advance and the legacy they build must be focused on ongoing investments in the Californians left out of our state’s economic successes. This is how policymakers can build a stronger, more equitable, and more sustainable economic future for our state and its people.

Independent policy research, analysis, and commentary with the goal of helping create an economy that works for all Californians.