California will expand its safety net programs despite projected $24 billion budget deficit
Earlier this year when Governor Gavin Newsom unveiled the annual budget he touted an expected surplus of nearly $100 billion. However, according to a report from the non-partisan Legislative Analyst's Office (LAO), California is likely to be facing a 2023 budget deficit of approximately 24 billion dollars.
The LAO attributes the shortfall to lower revenue estimates, which are lower than budget act projections from 2021‑22 through 2023‑24 by $41 billion. The LAO report said revenue estimates reflect the weakest performance the state has experienced since the Great Recession.
Despite the projected $24 billion budget deficit, Democratic lawmakers say the state will be able to maintain expansions of government services.
California spending for Immigrants
Estimates are that California spends $23 billion annually assisting 2-3 million undocumented individuals. Earlier this year Gavin Newsom enacted legislation making California the first state in the country to guarantee free health care for all low-income immigrants living in the state illegally.
In addition to healthcare those with refugee or asylum status, conditional entrants, people granted withholding of deportation or removal, or Cuban/Haitian entrants, may receive cash assistance through CalWORKs, and food assistance through CalFresh .
Immigrants can utilize services up to 60 months. Advocates have introduced legislation H.R. 5227 Lift the Bar Act seeking to expand program access past the current five-year bar.
California spending for homeless programs
There are an estimated 116,000 unhoused individuals in California. The 2022-23 budget authorizes a total of 9.1 billion for housing and homelessness programs. Some of the funds will be spread out over 3 years.
The LAO report details most of the funding—$5.4 billion—is primarily for housing-related proposals, while $1.9 billion is allocated primarily towards homelessness-related programs. The majority of spending is General Fund, including $2 billion in emergency spending related to rental assistance.
- Project Roomkey/Homelessness COVID Response
- CalWORKs Housing Support Program (HSP)
- CalWORKs Homeless Assistance (HA)
- Bringing Families Home Program (BFH)
- Housing and Disability Advocacy Program (HDAP)
- Home Safe Program
- Community Care Expansion Program (CCE)
The LAO predicts deficits will continue over the next 4 years between $8 billion to $17 billion. Some of the state’s budget woes stem from the tax base dwindling due to the ultra-rich, corporations and high-income families s moving out of state.
According to a Hoover Institute report “in 2021, California business headquarters left the state at twice their rate in both 2020 and 2019, and at three times their rate in 2018. In the last three years, California lost eleven Fortune 1000 companies”.
California levies some of the highest taxes in the country. The state has a franchise tax, corporate income tax, and alternative minimum tax. California’s top marginal income tax rate is 13.3% and the state’s sales tax rate is 7.25%, both the highest in the nation.
Despite dire predictions Senate Leader Atkins predicts the shortfall(s) will be manageable saying he is confident progress can be protected "without ongoing cuts to schools and other core programs or taxing middle class families".