Gov. Gavin Newsom has positioned himself as the leading politician for Progressive America – a posture that wasn’t difficult to take given California’s post-COVID budget surpluses that reached $97.5 billion. One of progressivism’s key tenets is continually increasing government spending. The governor’s budgets always reflected those priorities.

Now the state faces a projected $22.5-billion deficit. Apparently, Newsom didn’t heed the advice of former Gov. Jerry Brown, who typically announced his budgets with warnings about inevitable recessions. By contrast, Newsom’s new budget largely punts difficult spending questions to future years.

The nonpartisan Legislative Analyst’s Office offered a needed dose of reality (albeit in its typically understated way). “While the governor’s budget is balanced under the administration’s estimates for 2023-24, this is not the case for future years,” the LAO wrote. It points to operating deficits of up to $9 billion in coming years. That’s not sustainable – but it points to Newsom’s political problem.

The administration’s revenue predictions are $14 billion higher across three years than the LAO’s typically more-reliable predictions. But Newsom artificially masks the size of the shortfall. He is boosting K-14 spending by $3 billion, discretionary spending by $2 billion and spending for a Special Fund for Economic Uncertainties by $4 billion.

It’s not an insanely profligate budget, but it doesn’t reflect recession-related challenges. In a statement, the California Assembly Republican Caucus noted that LAO “disputed the governor’s contention that the state won’t face a recession in coming years.” Even if the economy achieves a soft landing, it’s unlikely to quickly return to boom times.

The governor is proud of the proposed spending boosts, as he touts “transformative funding to deliver on universal preschool, expand health care access to all and protect our communities.” He also points to expansions to Medi-Cal, law enforcement, economic development programs and his signature plan to combat climate change.

Yet it’s easy to see Newsom’s pickle. “Environmentalists slammed Gov. Gavin Newsom for slashing billions of dollars from initiatives that the governor has repeatedly called top priorities: efforts to combat climate change and transition to zero-emission vehicles,” reported CALmatters. The budget cuts climate spending from $54 billion to a still-substantial $48 billion.

We’re miffed at the governor for missing a historic opportunity to address California’s long-term problems by wisely using that previous surplus. He could have fixed the unsustainable pension system, revamped the tax code to make it less dependent on boom-and-bust cycles, rebuilt crumbling road infrastructure, created more competitive tax rates and addressed our water-storage shortfalls.

Newsom addressed those issues around the margins, but prioritized social programs. Now he’s relying on questionable accounting tactics to create the appearance of a balanced budget. The LAO pointed to $7.1 billion in delayed spending, $3.8 billion in spending reductions that are subject to “trigger restoration” if more resources become available later in the year and cost shifting from the general fund to special funds. Those are gimmicks.

Newsom’s budget assumes that more resources will be available in the future, but the LAO suggests lawmakers plan for a less rosy scenario and make additional spending cuts. In other words, the governor has punted many tough decisions to the Legislature – a big ask given its increasingly leftward tilt. The nation will soon see how well Newsom will govern in an era of limits.


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