As Governor Newsom unveiled the May Revision, there was much attention given to the size of California’s $97.5 billion “surplus.”
But it’s important to note that the functional “surplus” is roughly half of that since many dollars are legally owed to education spending under Proposition 98 and to reserves and debt payments under Proposition 2. Still, $49 billion in discretionary revenues is a big deal and presents a significant opportunity for California to help those most in need.
It’s also important to note that California’s healthy revenue — during a period of illness and economic instability for many families — is a symptom of growing income and wealth inequality. Despite a tumultuous two years of COVID-19, California’s wealthy and corporations continue to thrive.
Yet, for many Californians working isn’t enough. A job doesn’t necessarily mean you can pay the rent or put food on the table. And the 2022-23 state budget is a once-in-a-lifetime opportunity for state leaders to come together and provide significant relief for Californians who are most struggling to make ends meet. Prioritizing the urgent needs of Californians with low incomes isn’t just a fiscally prudent step — it’s the morally right thing to do.
Here are five ways state leaders can help Californians right now
1. Provide Meaningful Cash Relief to Californians with Low Incomes
Helping Californians with low incomes — who we know are struggling to make ends meet — should be a top priority for policymakers. California has the tools to provide relief that is thoughtful, targeted, meaningful, and efficient. This means building on the success of the Golden State Stimulus and targeting relief by income — not car ownership, as proposed in the governor’s ill-advised vehicle-based rebates plan.
State leaders can also provide targeted relief by building on existing ways to help Californians with the lowest incomes. This can be accomplished by strengthening the California Earned Income Tax Credit (CalEITC), expanding the Young Child Tax Credit, and increasing critical CalWORKs grants that keep families out of deep poverty.
2. Ensure Public Supports Include Undocumented Californians
Our state’s public support must be inclusive to all Californians regardless of immigration status. State leaders can better support the health and well-being of Californians who are undocumented by expanding food assistance programs to include eligible Californians of all ages. This is a necessary step to truly dismantle racist and xenophobic barriers and address persistent gaps in aid.
And while the governor’s proposal would expand Medi-Cal eligibility to undocumented immigrants ages 26 to 49 starting in 2024, policymakers can take steps to move up the implementation to increase access to comprehensive health care for people amid the ongoing pandemic.
3. Support Unhoused Individuals & Seriously Invest in Affordable Housing
California’s homelessness and housing affordability crises need to be met with the same urgency families and individuals feel when they’re at risk of losing their home or can’t pay rent, and this budget presents an opportunity for policymakers to help Californians get care and secure a safe place to call home.
The governor’s CARE Court proposal fails to follow a “housing first” approach, a key flaw. State leaders should consider instead allocating the funds to existing housing and behavioral health supports. Policymakers should also use the state’s unprecedented resources to significantly boost investments in affordable housing.
The governor’s May Revision Explained
Join us on May 20 as our Budget Center experts explore what the governor’s budget proposals mean for Californians with low incomes who we know are most struggling to make ends meet.
4. Help California Workers Access Paid Family Leave & State Disability Insurance
Helping California workers actually use paid leave should be an obvious step for California leaders. Yet, the updated spending proposal does not include a plan to increase payment rates — keeping these benefits out of reach for many workers. This move would most harm workers with low wages who are disproportionately women, Black, and Latinx Californians.
Policymakers should increase paid family leave and state disability insurance payment rates to allow more Californians to take time away from work to care for a new child, a family member, or their health.
5. Manage the Gann Limit for Now — and Move Toward Reform or Repeal in 2024
The Gann Limit is a decades-old spending limit that significantly constrains California’s ability to use revenues that exceed the arbitrary spending cap. While there’s no question that policymakers can keep spending under the Gann Limit this year, this is not a sustainable way to govern.
Unless the Gann Limit is repealed or significantly reformed, the state will face spending cuts to essential services, and California and its people will be kept from building a better and more equitable future. State leaders and the electorate must work together to significantly reform or repeal the spending cap no later than 2024 in order to avoid untenable budget choices.
These are just some steps policymakers can take to more equitably structure the 2022-23 state budget to provide much-needed relief to Californians who are most struggling to make ends meet. To learn more about the progress and missed opportunities in the governor’s May Revision, see the Budget Center’s comprehensive First Look analysis.