Here’s what Gavin Newsom’s new California budget means for you, from health care to schools

Gov. Gavin Newsom’s new budget proposal makes heavy use of reserves and federal funding to close a projected $54.3 billion deficit, but the $203.3. billion plan also includes cuts to education, health care and other services.

“It goes without saying that these are not ordinary times,” he said Thursday as he introduced a revised budget that accounts for the sudden recession caused by the coronavirus outbreak.

Cuts will touch on many aspects of Californians’ lives, from higher education to public employees’ pay.

Jobless and low-income households

Newsom over the past two years has proposed programs to put more money in the pockets of low-income Californians. He does not want to pull back on those efforts.

His budget proposal maintains the newly expanded Earned Income Tax Credit program, “which puts a billion dollars in the pockets of working families with incomes under $30,000, including a $1,000 credit for eligible families with children under the age of 6,” according to the budget summary.

In addition, the budget maintains current funding levels for families and individuals who are part of the CalWORKS and Supplemental Security Income and State Supplementary Payment programs.

His proposal extends temporary sales tax exemptions on diapers and menstrual products.

Newsom’s budget also anticipates an increase in unemployment insurance spending. The budget estimates $43.8 billion in spending, a 650 percent increase funded primarily through federal funds and employer taxes, according to the budget summary.

Health care

Newsom earlier this year proposed expanding Medi-Cal to include older undocumented immigrants. He cut that proposal in his revised budget, saving estimated $112.7 million.

Medi-Cal recipients will see a reduction in services in the budget proposal unless the state receives sufficient federal aid to restore them.

That includes the elimination of some dental, audiology, speech therapy, optometry, podiatry, occupational and physical therapy, pharmacist services, and diabetes prevention program services. The budget proposal would also reduce funding for some health care programs for elderly people

Education

One area that will see a substantial cut in state funding, offset somewhat by federal dollars, is K-12 education.

Last year, the state formula that determines minimum school funding provided about $81.1 billion for K-12 schools and community colleges. The sudden revenue decline would have pushed school funding to $70.5 billion funding through that formula.

Newsom is proposing to augment school funding by using for $4.4 billion in federal funding “to address learning loss and equity issues exacerbated by the COVID-19 school closures this spring,” according to the budget summary. That money comes from an economic assistance bill President Donald Trump signed in March.

The governor also wants to provide schools about $1 billion in funding next year by redirecting money that was to be used for a prepayment of state pension liabilities.

Higher education

Higher education will see significant cuts in funding.

The University of California and California State University systems each will see a 10 percent reduction in state support, though the UC and CSU systems have been instructed “to minimize the impact to program and services serving under-represented student access” to those systems.

The new budget sustains support for two years of free community college, however, and Newsom said that the CalGrant program will be key to supporting out-of-work Californians who decide to go back to school.

New businesses

The governor has proposed waiving the first year of the $800 minimum franchise tax.

“This proposal supports new business creation and innovation by limiting an often costly barrier to entry,” according to the budget summary.

Smokers

The state budget calls for the implementation of a new tax, on e-cigarette products. The tax would be $2 per 40 milligrams of nicotine, and would go into effect in 2021. It is projected to raise $33 million in the 2020-21 fiscal year, which would be used to increase enforcement and offset Medi-Cal costs.

Public employees

State workers will be heavily impacted by the governor’s budget, should it be implemented.

Newsom’s budget calls for reducing state employees’ pay by 10 percent, saving the state $2.8 billion.

While the budget says that the state will work with public sector unions to negotiate the cuts, “the administration will include a budget provision to impose reductions if the state cannot reach an agreement,” according to the budget summary.

This story was originally published May 14, 2020 at 4:26 PM.