Governor Gavin Newsom's May Revision

The governor released this revised budget on Friday, May 10 at a press conference. This most recent version of the budget highlighted a $27.6 billion shortfall. This is updated since the governor released his original budget proposal in January. The original forecasted deficit was $38 billion. Since January, the shortfall increased by $7 billion. However, due to "early action by the legislature, $17.3 billion has been added via borrowing, delays, deferrals, reductions, and shifts in spending.

 

Notably, the governor's original January Budget proposal had cut funding for two bills that were signed into law last year, SB 253 and SB 261. However, the May revise has funded both of these programs in the coming year. These bills will subject companies to climate disclosure requirements regulated by the California Air Resources Board (CARB). As these programs are established at CARB, CLFP staff will update membership on the impacts to industry.

During the press conference on Friday, the governor reassured Californians that he will not be raising taxes, although, this was cited as the main reason for the volatility of the state's revenue over the last several years. Impacts from Covid-19 as well as last year's atmospheric river events were also credited for having an impact of the current state of affairs. In 2023, the Federal government had declared a state of emergency due to floods throughout the state, which delayed tax filings and income estimates.

The governor will continue to work with the legislature on a finalized state budget in the coming weeks until the June 15 deadline. In the meantime, legislators will be negotiating any bills they are authoring with a fiscal impact.

Many CLFP members may be aware of the fiscal processes as bills move through the legislative process. Any bill that is designated "fiscal" must go through the Appropriations Committee in both the Assembly and the Senate. Depending on the Administration's priorities and the projected shortfall, bills are assessed and passed out of the Committee accordingly. One of the largest hurdles for authors is the "suspense file." Any bill that costs more than $150,000 automatically gets placed on the suspense file, and is held until the fiscal deadline. These bills will be heard on Thursday, May 16. After these hearings, the legislature will be able to work towards a finalized budget. CLFP's government affairs staff will also be monitoring upcoming budget trailer bills that may contain important funding for programs like the Food Production Investment Program (FPIP). However, considering the current budget, it is unlikely that there will be any further funding added at this time.

The governor's full budget summary can be found here.