Newsom, California lawmakers reach consensus on state budget

California Gov. Gavin Newsom (D) and state lawmakers announced late Monday night that they had reached a deal on the 2023-2024 budget without touching the state’s safety net.

The $310.8 billion budget, which would include $225.9 billion in general fund spending, would seek to bridge a nearly $32 billion deficit while maintaining $37.8 billion in reserves. 

The agreement resolves weeks of tension between Newsom and his Democratic colleagues over the governor’s push to expedite major construction projects — including a controversial tunnel that would shuttle water from the Central Valley to Southern California. 

“In the face of continued global economic uncertainty, this budget increases our fiscal discipline by growing our budget reserves to a record $38 billion, while preserving historic investments in public education, health care, climate, and public safety,” Newsom said in a statement late Monday. 

California lawmakers had voted earlier this month to approve their own amended version of the 2023 state budget bill, as they were required to do so by midnight on June 15. But they had also voiced intentions to continue negotiating with Newsom on the final terms, as revisions to the budget can occur in California through what’s known as budget “trailer bills.” 

The provisions outlined in Monday’s deal would shift funds without tapping into the state’s safety net reserve, in contrast with the terms of Newsom’s May proposal. 

“The plan safeguards our future, protects the progress we’ve made on key investments and keeps reserves strong at $37.8 billion,” Assembly Budget Committee Chairman Phil Ting (D)  tweeted on Monday night. 

While the new budget does provide permitting exemptions for certain groundwater diversion and recharge plans, the disputed water conveyance project — the Sacramento-San Joaquin Delta tunnel — was not included in the final deal. 

Environmental groups have long argued that the tunnel’s construction could cause significant harm to wildlife that inhabit the region and exacerbate existing water pollution problems.

Among the key measures included in the new budget package are increased funds for schools, community colleges, early childhood education and higher education, as well as for housing and homelessness-related expenditures. 

Public transit also would receive $5.1 billion for transit capital funding over three years — restoring a transit and intercity rail program that Newsom had intended to scrap, according to an Assembly Budget Committee floor report. 

“We’re also addressing transit’s fiscal cliff [with] $5.1 billion — most of which is flexible for capital and operations,” tweeted Ting, the budget committee chair. 

The budget would also include a trailer bill reauthorizing a tax on managed care organization providers — companies that work with the state to deliver Medicaid benefits — in order to bolster the state’s Medi-Cal program.

On the other hand, the package would increase reimbursement rates for Medi-Cal primary care, obstetric and behavioral health providers, while offering one-time assistance for rural hospitals that need to comply with the state’s seismic regulations. 

“We started our budget process this time around with tough economic challenges, but one overarching goal: to protect California’s progress,” Senate President pro Tempore Toni Atkins said in a statement. 

“This budget does exactly that — it allows us to close the budget gap, make targeted new investments and provide services and resources for Californians and our communities without cuts to core programs or dipping into our reserves,” Atkins added. 

Lawmakers are expected to sign the bills necessary to enact the revised package over the course of this week. Newsom must sign a budget into law before July 1, the beginning of California’s fiscal year.