Gov. Newsom to May Revise Winners – “You Get a Billion!”
Years ago, in perhaps one of the most well-known episodes of her long-running talk show, Oprah Winfrey gave away shiny-red Pontiacs to all of the unsuspecting members of her studio audience.
Uttering a phrase that has gone down in pop culture history, Winfrey told the shrieking audience, “You get a car! You get a car!”
He literally name-checked state lawmakers when announcing how much they would get for their top budget priorities. Homeless programs – you get $1 billion. Housing construction – you get $1.75 billion. Child care programs – you get an extra $130 million.
As I wrote about Gov. Newsom’s budget philosophy in January, he is trying to have something for everyone in his budget. It’s pretty easy to do so when you have a $21.5 billion budget surplus – and the economy continues to grow under President Trump’s economic agenda.
For fiscal conservatives, our shiny red Pontiac is more of a slightly used and rusted model. Newsom talked about completely paying off the “wall of debt,” building up a $16.5 billion rainy day fund, putting the first contributions into a new education rainy day fund, and another $340 million into paying off debt – all wise actions.
It is also good to pay down the state’s unfunded public employee pension debt by $4.8 billion. As our Wayne Winegarden has noted, California has nearly $1 trillion in unfunded public pension obligations.
But the May Revise was a lost opportunity make more progress in reducing the state’s outstanding pension debt. Lack of sufficient action has led to a pension crowd out in many cities, counties, and school districts, while state retiree pension and health care costs are rising each year – threatening future budgets.
These positives are significantly outweighed by the $213 billion in total state spending Newsom proposes in the May Revise and $4 billion in new spending he proposes over the January budget.
Newsom also wrapped together a bunch of big ticket government programs into what he calls a “parents’ agenda” – including costly increases in CalWORKs grants, an expanded “Earned Income Tax Credit” (which Newsom calls a “cost of living refund” and a move toward universal preschool in California. Yes, it is a parent’s agenda – if government is the parent. This is just the type of massive spending and ongoing programs that Gov. Brown rejected in his budgets – certain to put big pressure on future budgets.
This “parents’ agenda” sounds more like the government acting a parent toward Californians than anything to help moms and dads across the state. While it is nice packaging, don’t expect that these initiatives will be very effective. As our Lance Izumi wrote about universal government preschool back in January, “taxpayers should be wary of supporting pre-K expansion plans that may sound promising but fail to deliver desired results.”
And on homelessness, Newsom and his allies continue to put a priority on rapidly rehousing those who are on the streets, while shortchanging the need to permanently transform the lives of those on the streets. As Lance Izumi and Michele Steeb recently wrote, “these state and local programs place recovering and ‘trying to recover’ addicts in housing, often provided by nonprofits, that does not allow for the requirement of sobriety and where illegal drug use is uncontrolled.” Newsom’s budget is more of the same.
Now the May Revise goes to the Legislature’s liberal supermajority, which will surely try to one-up the Governor in the spending department.
While the recipients of the May Revise Pontiacs are surely celebrating, the hard-working Californians who have to make the car payments won’t be too happy the next time they pay their state tax bills.
Tim Anaya is the Pacific Research Institute’s communications director.