California Governor Gavin Newsom has proposed tapping into the state’s Rainy Day fund to address a projected budget deficit of $37.9 billion. While Newsom stopped short of labeling it a “crisis,” he acknowledged the need for declaring a “fiscal emergency” in order to withdraw more than $13 billion from the state’s reserves. The governor’s proposal, outlined during a press conference, aims to safeguard investments in education, public safety, and address pressing issues such as homelessness, mental health care, and climate action.
Newsom emphasized that the current deficit is significantly lower than the initial projection of $68 billion made by the Legislative Analyst’s Office. However, the budget shortfall may lead to delays in implementing a minimum wage increase for over 400,000 healthcare workers and force spending cuts in various housing and climate programs.
Despite the budget challenges, Newsom has pledged to maintain his previous commitments, which include providing free kindergarten for all four-year-olds and offering free health insurance to low-income adults, including undocumented immigrants. The latter initiative, announced by the governor, aims to extend health insurance coverage to approximately 700,000 undocumented residents aged 26-49. Since 2019, California has been providing free healthcare to undocumented immigrants under the age of 26.
The Newsom administration argues that extending healthcare to undocumented immigrants will reduce the likelihood of costly emergency room visits and treatments for diseases that would place a heavier burden on California taxpayers in the long run. The proposed budget for 2024-25 also includes $8.5 billion in spending cuts, with half of the reductions allocated to housing and climate programs. The remaining deficit is expected to be addressed through postponements, deferrals, borrowing, and shifting expenses to other funds.
In addition, the governor plans to allocate $126.8 billion to public schools, which is approximately $2.4 billion less than the previous year. To bridge the funding gap, Newsom intends to utilize funds from a special savings account for public schools approved by voters in 2014.
Republican Assemblyman James Gallagher criticized Newsom’s budget proposal, calling it “pure fantasyland” and accusing the governor of failing to acknowledge the state’s fiscal disaster caused by overspending. Gallagher argued that emptying out the savings account does not address the underlying spending problem.
It is important to note that this article represents the perspective of Fox News and may contain bias. The Associated Press also contributed to this report.
