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California Budget Challenges

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June 13, 2019

Governor Gavin Newsom and the Legislature are close to striking a deal on the new state fiscal budget before the June 15 deadline but not without concessions from both ends.  

Both the Assembly and the Senate have passed the budget.  It is now headed to the Governor’s desk for his signature.  In California, the Governor does have line veto authority so some of this can change.

The Governor and the Legislature have agreed to include a large increase in the state Earned Income Tax Credit in the budget, but are still negotiating the final details of both the tax conformity package and the tax credit expansion. While both the Senate and Assembly adopted versions of the Governor’s proposal, they did not adopt the proposal to pay for the increase

The Governor proposed shifting the Division of Juvenile Justice (DJJ) away from the California Department of Corrections and Rehabilitation and into the Health and Human Services Agency. The new department will be called the Department of Youth and Community Restoration. Accompanying legislation would also create an advisory body to provide recommendations and best practices that promote a commitment to improving youth outcomes, reduce youth detention, and reduce recidivism.

There is also a one-time allocation of $5 million General Fund for a restorative justice pilot program in San Joaquin County. This program would put victims first and help transform those who have committed crimes to reduce our reliance on mass incarceration.

The Legislature’s negotiated budget package includes $31.4 million to add 10,000 new preschool slots with non-public providers for 4-year-olds living in low-income neighborhoods, regardless of their own family’s incomes. Additionally, $50 million is allocated for establishing Child Savings Accounts to prepare for college access.  To help recruit and retain qualified teachers in school districts with high rates of under prepared teachers, the budget creates a Golden State Teacher Grant program. This program would provide up to $20,000 to students in educator preparation programs that commit to teach in subject areas most impacted by the teacher shortage -- and at a school that has a high percentage of teachers holding emergency-type permits.

The revised budget deal continues to increase funding for undocumented immigrants through assistance with legal services via the CSU and UC systems. The budget also includes $55 million for the Department of Social Services funds to provide legal services to immigrants who reside in California via the Unaccompanied Undocumented Minors and Immigration Services Funding programs. 

There are also gains for families in the budget. For those seeking to take time off to care for a family member or bond with a new baby, extending the paid family leave program from six to eight weeks. There would also be a $1,000 tax credit for qualifying families with children under age six, and the elimination of sales taxes on diapers.

In addition, while the details are still being worked out, it appears that there is help in the budget for middle-, low-income and seniors who are struggling to afford healthcare. Under the new deal, those making between 400 and 600 percent of the poverty level, which is between $103,000 and $154,000 for a family of four, would get new assistance. The funds would be generated by those who pay a penalty tax for not purchasing health insurance.

Stay with the CCC for additional news on the budget.