Governor Newsom’s $215B State Budget Signed

Gov. Gavin Newsom signed his first California state budget, a $214.8-billion plan for 2019-20 that increases spending on public education, will allow healthcare services to be expanded, and help prepare the Golden State for an economic downturn. It is the largest budget in state history, with a majority of its provisions set to take effect today.

“The driving idea behind this budget – and my first year in office – is to combat the cost crisis and maintain fiscal discipline,” said Governor Newsom. “This is a responsible budget that saves for challenging times ahead, while investing in the present-day needs of working Californians.”

Allocations that affect real estate include:
– An historic $1.75 billion investment to accelerate the production of new housing
– Measures to hold local jurisdictions accountable to meet housing demand
– $20 million to provide legal aid for renters and assist with landlord-tenant disputes, including legal assistance for counseling, renter education programs, and preventing evictions

The state’s major cities, counties and regional homelessness prevention agencies will split up $650 million, in an effort to address the state’s housing and homelessness challenges by making it easier for developers to build. There will also be financial penalties for local governments that violate state laws requiring them to plan for growth.

Senator Scott Wiener (D-San Francisco), who serves as Chair of the Senate Housing Committee, issued the following statement upon the Governor’s office and Legislative leadership announcing a housing budget trailer bill: “I support the housing budget trailer bill and thank the Governor and legislative leadership for moving forward a strong and forward-looking piece of legislation. In addition to significant new funding for affordable housing, this bill puts teeth into existing state laws, to ensure cities and counties actually follow those laws. This improved approach to enforcement is a positive step.”

The new budget sets aside $103.4 billion for education from kindergarten through 12th grade.

California will end the year with total reserves of $19.2 billion, of which $16.5 billion is earmarked for the Rainy Day Fund. Another $1.4 billion is set to go to the Special Fund for Economic Uncertainties, $900 million is allocated for the Safety Net Reserve, and nearly $400 million will go to the Public School System Stabilization Account.

There is also an extra payment of $9 billion over the next four years to pay down unfunded pension liabilities. This includes $3 billion to CalPERS and $2.9 billion to CalSTRS on behalf of the state, and $3.15 billion to CalSTRS and CalPERS on behalf of schools.

The state will invest $4.5 billion to eliminate the Wall of Debt, and reverses the decade-old deferral undertaken during the last recession.

The budget prioritizes one-time investments, with 88% of new expenditures being temporary rather than ongoing. The state says this addresses the affordability crisis facing Californians, while minimizing ongoing commitments to avoid putting the state at fiscal disadvantage in the future.

Connect Bay Area is coming up July 18, 2019 at the Grand Hyatt San Francisco. Get more information, and register to attend on this link.

For comments, questions or concerns, please contact Dennis Kaiser