Fact check: Is California’s budget really on track to grow 12% during the pandemic?
Claim: “California’s budget is going to be up 12%,” Sen. Rick Scott told reporters as he argued against more federal aid to state and local governments.
Rating: Largely true.
Details:
Scott, R-Florida, is chairman of the Senate Republican campaign committee. President Joe Biden’s $1.9 trillion economic relief plan includes $350 billion to help state and local governments. If the money is distributed as COVID relief funds have been, California could wind up with $35 billion or more.
Senate Republican leaders are adamantly against such funding, saying state budgets are doing fine and don’t need such help.
After a closed-door Senate GOP meeting this week, Scott told a news conference that California, Illinois and New York specifically didn’t need more aid, and made his claim about the 12% budget increase.
He’s correct, but it’s over a two year period, and it’s largely the result of a need to spend more on COVID-related emergencies, wildfires, schools and the economic downturn.
Scott’s office cited two press releases from Gov. Gavin Newsom.
On June 29, 2020, the governor signed the 2020 Budget Act, a $202.1 billion spending plan that provided emergency COVID-related relief and balanced the budget after the recession blew a $54.3 billion hole in the budget.
In January, Newsom submitted a proposal fiscal 2022 budget of $227.2 billion. Much of the increase was for COVID-related relief efforts.
That’s a 12.4% increase.
H.D. Palmer, spokesman for the Newsom administration’s Finance Department, said the 12% figure represents an increase over two fiscal years, between fiscal 2020 and fiscal 2022.
About half of the increase is largely one-time spending primarily on emergency responses to the COVID pandemic, recent wildfires, and helping the economic recovery. The rest is increased spending on kindergarten through community college.
The state budget is increasing so much, even as California’s economic activity has shrunk, partly because state officials overestimated how much the pandemic would tank California’s finances in the short term. When they enacted their budget last June, Newsom and state lawmakers made cuts and deferred payments to make up for a projected $54 billion deficit.
But since then, tax revenue has come in much higher than state budget experts predicted because the economy is recovering unevenly from the pandemic-driven recession. High income earners continue to prosper, while low-wage workers face the worst consequences.
California’s budget relies heavily on tax revenue from its top earners, so the state’s coffers have stayed flush as those workers kept their jobs and continued to work from home.
“We are on a much better fiscal footing than anyone could have imagined even a few months ago,” Newsom said during his budget presentation in January, but added a warning: “Our forecast in terms of the future is very, very, very tenuous.”
Despite the good budget news for the upcoming fiscal year, Newsom argues the state needs more federal help because it faces future deficits and continued expenses related to the pandemic and economic recovery.
Palmer’s comment on Scott’s claim: “Florida man finds fighting COVID, funding schools confusing.”
This story was originally published February 6, 2021 at 5:00 AM.
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