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A Look at the State Budget, By Zach Friend, Supervisor, Second District
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FEATURED COLUMNIST A Look at the State Budget
By Zach Friend, Supervisor, Second District
Gov. Newsom recently proposed his budget for 2022-2023. In his propoal, he outlines investments in five primary areas. What exactly is in the Governor’s budget proposal and how will some of it impact Santa Cruz County?
Here is a look at the proposed state budget and key elements.
Budget Process
The State Constitution requires the Governor to submit a balanced budget proposal to the Legislature by Jan. 10 of each year.
This initial budget is generally revised closer to June in the “May Revise” as more details become known about the economic health of the state. Like our local County budget, the budget document out- lines the state’s spending plan for the fiscal year beginning July 1.
Nearly immediately after the introduction in January, the state Legislative Analyst’s Office, the Legislature’s nonpartisan fiscal advisor, publishes a series of reports that review the Governor’s budget proposal.
These analyses often inform the budget debate in the Assembly and the Senate and include economic projections, context and background information and possible revisions. Ultimately, the Legislature has until June 15 to pass the budget.
Proposed Investments
The Governor’s budget proposes investments in five key areas: • COVID-19, including increased vaccines, testing, and medical personnel. • Homelessness, including mental health housing and encampments. • Climate change, including forest management and drought response. • Affordability, including healthcare coverage, child care, housing, and small business relief. • Safer streets, including local law enforcement grants and gun buybacks.
Within those buckets, the Governor is proposing the following new investments (with some of these funds proposed for counties although the exact distribution isn’t known at this point): • $1.3 billion for additional emergency
COVID-19 response. • $2 billion for homeless behavioral health bridge housing and encampment cleanup. • $200 million ongoing for local public health infrastructure. • $1.2 billion over two years for wildfire and forest resilience. • $247 million for wildfire engines, helicopters and additional fire crews for surge capacity. • $750 million for drought. • $2 billion for affordable housing.
The state has a projected surplus of $45.7 billion, which includes $20.6 billion in General Fund for discretionary purposes, $16.1 billion in additional Proposition 98 for K-14 education, and $9 billion in reserve deposits and supplemental pension payments.
The proposed budget allocates 86 percent of the discretionary surplus to onetime investments and reflects $34.6 billion in reserves. These reserves include: approximately $21 billion in the Rainy Day Fund for fiscal emergencies, $10 billion in the Public School System Stabilization Account; $900 million in the Safety Net Reserve and $3 billion in the state’s operating reserve.
The proposal accelerates the paydown of state retirement liabilities with more than $8 billion projected to be paid over the next three years. For Santa Cruz County, some of the items of greatest interest include investments to combat homelessness, housing supports for behavioral health, climate, water and forest resilience and transportation funding. Here is a more in-depth look a t some of these line items — and things that could end up providing some level of funding to our county.
Behavioral Health
The Governor included a $1.5 billion investment in immediate housing solutions for individuals with behavioral health needs.
The funding is to bridge the gap in housing and services for unhoused individuals living with behavioral health needs. The funding will focus on purchasing, installing, and providing support for tiny homes, as well as operational support for other housing settings including assisted living settings.
Homelessness
For homelessness the budget proposal $2 billion in funding over two years including $500 million in the Encampment Resolution Program.
This program provides for competitive grants for cities, counties, and continuums of care to support encampment resolution and the transition of individuals into housing.
Affordable Housing
The Governor’s proposal builds on California’s previous investments in housing and provides an additional $500 million in Low Income Housing Tax Credits in 2022-23 and an additional $1.5 billion to the General Fund over two years to support construction of additional subsidized affordable homes.
