The Essential Guide to the May Revise

THE ESSENTIAL GUIDE TO THE MAY REVISE

politicopro.com/california 1 TABLE OF CONTENTS

3 Intro

4 Budget timeline & overview

5 Senate & Assembly Budget Committee Members

7 The Revision: 5 things you should know

2 IT’S OFFICIALLY BUDGET SEASON IN CALIFORNIA, AND GOV. GAVIN NEWSOM HAS RELEASED HIS MAY BUDGET REVISE.

Due in large part to his predecessor Jerry Brown’s fiscal conservatism, Newsom began his term by inheriting one of California’s strongest budget positions in over a decade. This, including an estimated $21.5 billion surplus, allowed Newsom to propose California’s largest spending proposal to date.

Now, after a financially robust spring for California, due largely to the state’s booming Tech sector, Newsom’s revised spending proposal now totals a sum of $213.5 billion. The governor’s new general fund budget includes $147 billion in spending, which is a 2 percent bump from the original spending proposal of $144.2 billion.

Keep an eye on California’s revenue stream as forecasters now predict the state will see even more money come in over the next 14 months.

BUDGET DAY QUOTES Here are some of our favorite quotes from Newsom during his 93-minute press conference:

“You can’t count “I dispute the fact on anything in life. “I am in the anxiety- that we always “Forgive me.” After noting a recent spike Life’s uncertain; that’s reducing business.” need to be disput- in gonorrhea rates my Jerry Brownism.” ing each other.”

3 BUDGET TIMELINE & OVERVIEW The 2019 budget process at a glance

PROPOSED JANUARY - FEBRUARY The California State Constitution requires that the governor submits a budget GOVERNMENT SUBMITS PROPOSED BUDGET to each house of Legislature by Jan. 10. If expenditures exceed estimated revenues, the governor must recommend sources for additional funding. BUDGET BILL INTRODUCED LEGISLATIVE OFFICE PREPARES After the budget is released, the Legislative Analyst’s Office provides a ANALYSIS AND OVERVIEW detailed review of the budget and recommends legislative action.

MARCH - MAY In March, each house will refer its budget bill to their respective budget SENATE AND ASSEMBLY committees. The bills will be broken down into subcommittees, based on BUDGET COMMITTEE CONVENE jurisdiction in areas such as education, health and human services, and state operations. These subcommittees can approve, reject or make adjustments to spending levels.

MAY - JUNE 15 In a process known as “May Revise,” the governor will consider the subcommit- GOVERNOR SUBMITS tees adjustments and resubmit the proposed January budget. “MAY REVISE” After this “revise,” each house retains the option to make adjustments, but the governor’s new proposal must be adopted during this subcommittee process. BUDGET CONFERENCE COMMITTEE RECONCILES Next, the budget committee of each house sends revised bills to the floor for the AND ADOPTS BUDGET whole legislative body to evaluate. Each house will then vote on their own versions of the bill, and a conference committee will combine the two bills into a LEGISLATURE VOTES single version. ON BUDGET This single version is then voted on by the Assembly and Senate. Once it has passed by a two-thirds majority it is sent to the governor.

JUNE 15 - JULY 1 Once with the governor, he has the power of “blue penciling,” meaning he GOVERNOR SIGNS BUDGET has the veto power to reduce or eliminate certain budget line items. Any items vetoed by the governor can be later overridden by a two-thirds majority SIGNED in the house. Finally, the bill goes into law once signed by the governor. 4 THE BUDGET PLAYERS The lawmakers expected to shape the budget alongside Newsom.

THE SENATE BUDGET & FISCAL REVIEW COMMITTEE

SENATOR HOLLY J. MITCHELL SENATOR JOHN M. W. MOORLACH D Chair District 30 R District 37

SENATOR JIM NIELSEN SENATOR MIKE MORRELL R Vice Chair District 04 R District 23

SENATOR JIM BEALL SENATOR RICHARD PAN D District 15 D District 06

SENATOR MARIA ELENA DURAZO SENATOR RICHARD D. ROTH D District 24 D District 31

SENATOR MELISSA HURTADO SENATOR NANCY SKINNER D District 14 D District 09

SENATOR BRIAN W. JONES SENATOR HENRY I. STERN R District 38 D District 27

SENATOR CONNIE M. LEYVA SENATOR JEFF STONE D District 20 R District 28

SENATOR MIKE McGUIRE SENATOR THOMAS J. UMBERG D District 02 D District 34

SENATOR BILL MONNING SENATOR BOB WIECKOWSKI D District 17 D District 10

5 THE BUDGET PLAYERS The lawmakers expected to shape the budget alongside Newsom.

THE ASSEMBLY BUDGET COMMITTEE 2019 CONFERENCE COMMITTEE Note the list below only includes Committee and Subcommittee chairs. ASSEMBLY MEMBERS

ASSEMBLYMEMBER PHIL TING TO BE DETERMINED D Chair ? Chair

ASSEMBLYMEMBER JAY OBERNOLTE TO BE DETERMINED R Vice Chair ? Chair

ELOISE GÓMEZ REYES TO BE DETERMINED D Acting Chair Health and Human Services ? Chair

SENATE MEMBERS KEVIN McCARTY D Chair Education Finance TO BE DETERMINED ? Chair RICHARD BLOOM D Chair Resources and Transportation TO BE DETERMINED ? Chair JIM COOPER D Chair State Administration TO BE DETERMINED ? Chair SHIRLEY N. WEBER D Chair Public Safety This group of six members, with three representatives from each house, are appointed to consider matters PHILIP TING upon which the two houses disagree. Appointees from D Chair Budget Process Oversight both houses will be announced in late May. and Program Evaluation

6 THE MAY REVISE: 5 THINGS YOU SHOULD KNOW

During an over 90 minute press conference, Newsom laid out his plans for California’s budget revisions. In this address, Newsom outlined a new $213.5 billion spending proposal that calls for increased spending on everything from assisting California parents to solutions for solving California’s homelessness problem. Here are five things to know about the 2019-20 executive budget revisions:

THE BUDGET REMAINS 1 EDUCATION HEAVY As part of his education-focused budget, Newsom hopes $400 million of state revenue will be put into a to “level the playing field’ for charter and traditional schools. Proposition 98 rainy day fund Amongst rising tensions over the privately-run public charter programs, the budget proposes to ban charter schools from not accepting students who perform poorly or have special PLANNING FOR education needs. Proposals also include plans to establish 2 A RAINY DAY a process for families to report concerns to a charter Almost $400 million of state revenue will be diverted from school’s authorizer and to prohibit charter schools from school districts and put into a Proposition 98 rainy day fund. requesting a student’s academic records.

For the first time ever, $389 million will be put into an In response to teacher strikes happening around the state, education reserve account that was created in 2014. a significant amount of extra money will be earmarked for Approved by voters, the reserve was created to set aside education: teacher training, special education, community state money for future economic downturns. A deposit into colleges and paying down educator pension gaps would this reserve account would only be required if the state was all get extra doses of funding in Newsom’s proposal. facing a very healthy budget and met certain criteria - which many educators didn’t think would come to a reality. As Newsom states, it’s “good news and bad news” because educators can no longer touch the money that would have $41.1 billion flowed directly into their districts. in Proposition 98-guaranteed school Newsom claims that the proposition is “broadly a very positive funding, which Newsom claimed thing”, but the education community finds it pretty concerning would be a record to their bottom line, especially in light of recent teachers strikes over budgets in Los Angeles, Oakland and Sacramento.

7 THE BUDGET REVISE: 4 5 THINGS YOU SHOULD KNOW

THE CANNABIS TAX • The governor also would allow an ongoing 3 FALLS SHORT 7 percent restoration to In-Home Supportive Services According to the revised budget estimates, cannabis tax hours to expire by the end of 2021. revenues are coming in considerably below initial • Also set to expire at the end of 2021 is a series of estimates for the state. Newsom cautioned against Medi-Cal benefits funded by tobacco taxes including passing premature judgment on a market that he trauma screenings and optician services. believes will take at least five to seven years to mature. • Newsom’s highly-touted tax exemptions for diapers and The governor attributed the revenue gap in large part to menstrual products only last two years under his budget. local resistance to a still developing industry. FINDING A In order to neutralize opposition against the 2016 5 WAY HOME state legalization, the measure empowered cities and “This homeless issue is out of control,” Newsom said at counties to make licensing and authorization decisions his budget rollout. “It is a stain on the state of Califor- for their own jurisdictions. Newsom now faults this for nia.” Under the revised budget plan, California cities holding back tax revenues because many cities and and counties would get more money to fight homeless- counties have declined to authorize cannabis commerce ness and plan for new housing infrastructure. and many have drug their feet on issuing licenses. Confronting the state’s widespread housing shortage

In January, fiscal planners projected that cannabis is one of the highest priorities of Newsom’s agenda. taxes would generate $288 million in the current fiscal His updated budget retains a $1.75 billion package year and $359 million in the following year. These new to spur on local building, with $500 million of that January projections fall $67 million short and $156 being earmarked for infrastructure that supports devel- million short of earlier projections. opment. Newsom also maintained a proposal to pull transportation infrastructure funding that flows from a hard-fought tax increase if local governments fail to A FUTURE 4 LESS BRIGHT meet housing goals. Critics oppose this move and have even called it a bait-and-switch, as local governments While generally, the budget proposal has grown, can only plan for housing, and that the people of there are several key areas in which Newsom rolled back California are the ones building it. future spending: • Newsom wishes to delay opening new spots for low-in- In total, homelessness initiatives would get $1 billion come 4-year-olds. Citing lower projected revenues over and Newsom is proposing a $650 million expense the forecast period, Newsom cut his plan to add 30,000 to cities and counties to build emergency shelters and new spots for those children, instead opting for a plan that navigation centers — a $150 million boost from his offers only 10,000 new spots to low-income children. prior proposal.

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