Jan. 11, 2019: THE HILL - Sen. Mitchell pleased with Gov. Newsom's commitment to social programs

January 11, 2019

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By Reid Wilson

Four days into his term in office, California Gov. Gavin Newsom (D) laid out an ambitious and costly agenda of new spending on social services that his famously skin-flint predecessor resisted.

Newsom on Thursday laid out a $209 billion budget proposal, an $8 billion increase over former Gov. Jerry Brown’s (D) last budget, that includes big increases to housing, education and health care programs fueled by a massive and unexpected surplus in state revenue.

“This budget is primarily two things, education and health and human services,” Newsom said in a nearly two-hour press conference.

Newsom proposed spending almost $2 billion in new early childhood education programs and hundreds of millions more to give students a second year of community college for free.

He said he would ask legislators to approve a new payroll tax to allow up to six months of paid leave after the birth of a child, up from the six weeks employees are currently allowed.

At the same time, Newsom proposed doubling the state’s earned income tax credit, which he said he would call the working families tax credit.

Newsom also pledged $750 million in funding for local communities struggling to build new housing, and half a billion dollars to mitigate the homeless crisis that leaves more than 100,000 California residents on the streets.

Housing “is the issue. And unless we get serious about it, then this state will continue to lose its middle class and the dream will be limited to fewer and fewer people,” Newsom said.

At the same time, Newsom showed a hint of the pragmatic streak that defined the last eight years of Brown’s administration. Brown, who came to office facing more than $20 billion in budget deficits, frequently used his budget address to warn of the risk of an impending recession and to push back against Democratic lawmakers who wanted to spend more money on social programs.

The legislature, where Democrats hold super majorities in both chambers, has already signaled its own interest in spending heavily. Legislators have proposed more than $40 billion in new spending, ambitious plans Newsom said would have to be scaled back.

Newsom said he would use some of the expected $21 billion surplus to pay down billions in unfunded liabilities held by California’s public employee and teacher’s unions. Billions more will go into the state’s rainy day fund.

“Some of the money is around to do some of the big things he wants,” state Assembly Speaker Anthony Rendon (D) told The Hill in an interview last week.

State Sen. Steve Glazer (D), a former top political advisor to Brown who has become one of the more fiscally cautious Democrats in Sacramento, called the plan to pay down debt “a prudent approach to taking on our long-term obligations.”

In a nod to the temporality of good fiscal times, all but $3 billion in new spending Newsom proposed is one-time spending, rather than new ongoing obligations the state would be forced to shoulder even if a recession hits.

Even some Republicans said they appreciated Newsom’s approach.

“In Gov. Newsom’s first budget there is a lot to applaud, including expanded efforts to pay off debt, build the state’s reserves and increase the Earned Income Tax Credit,” state Senate Republican leader Patricia Bates said in a statement.

Still, Bates said she was “concerned with massive unfunded liabilities and also the new proposals to expand services and obligations that the state will not be able to afford when the economy slows down.”

Where Brown saw his early budgets as an opening bid from which to negotiate with legislators, Newsom’s first budget proposal is more ambitious. It won more praise from social services interest groups like teacher’s unions and child welfare advocates than did some of Brown’s initial budgets.

In a joint statement with Senate President Toni Atkins (D), state Senate Budget Committee chair Holly Mitchell (D) — who favors more spending on education programs — said she was “pleased that the governor shares our commitment to investing” in those programs.

Though surpluses are strong now, legislators are increasingly nervous that the good times will end soon. That has put the brakes on some of the most ambitious new spending proposals, both in the legislature and the governor’s office.

“We believe, given that we’re eight years into an economic recover and an economic cycle, that a recession is definitely looming,” Assembly Budget Committee chairman Phil Ting (D) told The Hill. “We just don’t know where it is.”