The state government will have another “historic budget surplus” in the next fiscal year, Governor Gavin Newsom said October 20 during a presentation at the Milken Institute’s Global Conference.
The governor said his administration today will announce “an additional $14 billion above our cash projections,” and in his January budget proposal, “I’ll be announcing another historic budget surplus, record reserves, paying down $11.3 billion in pension obligations ….”
(CalTax: The Legislative Analyst’s Office this morning released a revenue update stating: “We currently project that there is a good chance that collections from the state’s ‘big three’ taxes – personal income, sales, and corporation taxes – will exceed the budget act assumption of $170 billion in 2021-22 by at least several billion dollars. Currently, our best estimate is that there will be somewhere between $8 billion and $30 billion in unanticipated revenue. As reflected by the width of this range, with so much of the fiscal year ahead of us there remains significant uncertainty about how much the state ultimately will collect.”)
Newsom’s 35-minute presentation was structured as an interview with Chuck Todd, moderator of NBC’s “Meet the Press.”
After telling Todd he “didn’t want to bore you with those talking points,” Newsom said he wanted to make a point: “You don’t have to be profligate to be progressive – Democrats can govern and they can balance the damn budgets.”
Details of the 2022-23 budget proposal will be unveiled when Newsom presents his plan to the Legislature prior to the constitutional January 10 deadline.
“This year … we had a historic budget surplus – I’ll repeat that, [an] $80 billion operating surplus,” Newsom said. “Not one penny [of the surplus] was coming from the federal government. We got an additional $27 billion, on top of that, from the federal government.”
The governor did not discuss with Todd whether tax rates will be reduced, recent tax increases on businesses will be repealed, or unemployment insurance fund debt will be repaid (to prevent tax increases on employers) in light of the massive surplus of tax revenue being collected by the state.
The current budget included “California stimulus” payments sent to Californians with income under $75,000 – described by the Newsom administration as “tax rebates” – as well as grants targeted to small businesses. After the budget was enacted, Newsom and the Legislature approved measures to increase phone taxes to pay for expanded broadband Internet services.
Addressing homelessness will continue to be a major focus in 2022-23, the governor said. He said that when he took office, the state government “was nowhere to be found on the issue” of homelessness, but his administration has made progress.
Asked about Elon Musk leaving California, and whether the cost of living is a problem the state needs to rectify, Newsom said: “Cost of living, cost of housing absolutely is. It’s the number one pre-existing condition. It’s the issue that explains more of the other issues that we have.”