Success of Private Sector Economy Reflected in State Budget Bounty

The $214 billion state budget that went into effect at the beginning of this month relies heavily on the success of the private sector economy.

Governor Gavin Newsom’s first budget includes close to $20 billion in reserves, at the Governor’s insistence, as well as paying off the “wall of debt” incurred during the last recession.

In signing the budget on June 27, the Governor called it “a responsible budget that saves for challenging times ahead while investing in the present-day needs of working Californians.”

Private Sector Performs

California Chamber of Commerce President Allan Zaremberg pointed out that the newly adopted budget “is brought to you by the wealth created from California’s private sector economy.

“California’s robust economic growth has created low unemployment and increased opportunities.”

Zaremberg noted, “California’s growth has also created new challenges that the Legislature and Governor must address, including the high cost of housing and other essential needs, an epidemic of homelessness in the state, and punishing commute times for California workers.”

He continued, “The economic growth dividends in the budget have allowed the Legislature and Governor to substantially increase spending for public schools, add thousands of new slots for California colleges and universities, improve the health care safety net, increase access to justice in the court system, and provide more resources for wildfire prevention and response. Along with providing for a substantial rainy-day reserve, funding these priorities is an investment in California’s future economic growth and success.”

Budget Highlights

• Paid family leave is expanded from six weeks to eight weeks. This is part of the Governor’s “Parents Agenda” and a step toward the Governor’s goal of providing six months of paid family leave.

• Public schools will see their total allocations rise by 65% since 2008–09, with per pupil funding topping $12,000 for the first time. Recognizing the drain that pension obligations are having on schools, the budget provides more than $3 billion to moderate districts’ future pension cost increases.

• The budget also provides for nearly 15,000 new slots for undergraduates at the University of California and California State University. It expands the College Promise fee waiver program to a second year at community colleges.

• The budget incorporates the Governor’s proposal to add more than $200 million to enhance the state’s fire protection and suppression capabilities, and more than $230 million to increase the pace and scale of forest health and fire prevention activities,

• Over three years, the budget will allocate $1.45 billion to increase Covered California health insurance premium support for low-income Californians and provide premium support for qualified middle-income individuals, partially funded by restoring the individual mandate penalty for individuals who do not carry health insurance.

• Increasing housing supply is the goal of a $1.75 billion package that includes planning and infrastructure grants to help local governments reach their housing goals.

• A $1 billion allocation will help provide emergency aid to local governments to deal with homelessness with emergency housing vouchers, rapid rehousing programs and building emergency shelters.

Details of the signed budget can be viewed at