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Legislative Office Advising Newsom Administration To Revise Budget

Photo: Margulies, Sasha (uploader)

The Legislative Analyst's Office is advising the Governor Newsom Administration to revise his budget.

The LAO is reporting that Governor Newsom's spending plan could deplete the state’s ability to balance the budget once the revenue bubble bursts and federal aid dries up. The independent agency is recommending the legislature to consider rejecting around $10 billion to keep the state budget on track. They also say there are two long-term solutions: first, cutting taxes over time, and second, asking voters to change the state appropriations limit, last set in the 1970s.

Governor Newsom's office says the governor is aware of the future of the state economy and it is factoring that into his decisions. “This is a generational budget,” Governor Newsom said. “This is an historic, transformational budget. This is not a budget that plays small ball. We’re not playing in the margins. We are not trying to fail more efficiently.” However, the Legislature’s budget analysts, Gabe have much different takes, saying the true surplus that can be spent or saved over two years is more like $38 billion — a very substantial sum but lacking the political punch of the numbers Governor Newsom gave out.

“Despite a historic surge in revenues, the governor continues to rely on budget tools from last year,” Legislature’s budget analyst, Gabe Petek, said. “Specifically, he uses $12 billion in reserve withdrawals and borrowing to increase spending. The state will need these tools to respond to future challenges, when federal assistance might not be as significant. We urge the Legislature not to take a step back from its track record of prudent budget management.”

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