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Essential Politics: Newsom’s $100-billion budget plan

Gov. Gavin Newsom gestures toward a chart
(Rich Pedroncelli / Associated Press)

This is the May 10, 2021, edition of the Essential Politics newsletter. Like what you’re reading? Sign up to get it in your inbox three times a week.

Emboldened by a substantial windfall of tax revenues and perhaps a desire to boost his liberal credentials in the face of a conservative-led effort to remove him from office, Gov. Gavin Newsom will roll out this week what his advisors say is a $100-billion “California Comeback Plan,” beginning with $8 billion in new cash payments to millions of the state’s residents and their families.

The details will be trickled out by Newsom’s team, hoping for a crescendo of budget news to build throughout the week and culminate with the unveiling of the governor’s revised state spending plan, which must be presented to lawmakers by Friday.

While there’s a lot that is left to be announced, it certainly has the makings of a state budget for the history books.

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Golden State Stimulus checks, Part 2

The governor will begin a week of budget announcements by calling for an expansion of the Golden State Stimulus program that sent $600 checks this year to low-income residents and families. Newsom’s expansion targets all Californians who earned no more than $75,000, and it would add $500 in help for adults who have children.

Administration officials say that once all the stimulus efforts are rolled in together, some two-thirds of all Californians will have received help to weather the COVID-19 pandemic.

Adding the new assistance checks to the payments made to needy residents earlier this year, the program is estimated to total $11.9 billion.

The magnitude of the cash payments is breathtaking, even in a state where government programs often come with multibillion-dollar price tags. (For some context, the stimulus program could end up costing about 90% of what state officials in January said it would cost to operate California’s prisons for the fiscal year.)

But there’s a fascinating backstory, as the new money being announced by Newsom on Monday is pretty much what the state is required to do under a law approved by voters in 1979.

Gann’s limit, cash for Californians

Paul Gann‘s sales pitch that year was simple: Don’t let politicians undermine Proposition 13.

Angered by local and state officials’ efforts to replace the dollars lost to the 1978 tax cut he crafted with anti-tax crusader Howard Jarvis, Gann returned the following year with Proposition 4, a ballot measure to limit government spending.

“Let government trim their sails and get rid of the fat,” Gann said in an Aug. 15, 1979, profile in The Times. “We’re picking up where 13 left off!”

Voters resoundingly agreed that November — in part, perhaps, because Gann’s ballot measure also required a tax rebate when revenues outpaced spending on taxpayer-funded programs. The provision has been triggered only once in the law’s 42-year history, resulting in a $1.1-billion rebate in 1987.

Until this month, that is.

Newsom administration officials say a still-growing tax windfall has spilled over the so-called “Gann limit” on state spending. In January, the spillover was estimated at $102 million over a two-year period. This week, Newsom will announce the excess cash that can’t be spent under regular budget rules is an astounding $16 billion.

Only half of that is going back to Californians as a tax rebate, branded by Newsom as part of his Golden State Stimulus program. That’s because critics of Gann’s law tucked changes to it inside two voter-approved ballot measures in 1988 and 1990. One change requires that excess cash be equally divided between taxpayers and public schools. So we would expect to see an $8-billion boost, as well, to K-12 schools and community colleges in the budget plan rolled out later this week.

And then there’s child-care expansion

Newsom used Mother’s Day to announce another part of his budget plan in which he will ask the Legislature to add 100,000 slots in child care across the state.

“I can assure you we have the backs of mothers and will be making investments to solve real problems and to acknowledge the extraordinary stress so many moms, particularly working moms, have been under this past year,” the governor said in an online video with First Partner Jennifer Siebel Newsom.

The cost of the child-care expansion wasn’t immediately disclosed, though some budget watchers believe it could be more than $1 billion.

The announcement also promised “millions more in state funds” to help support child-care providers and $200 million to offer career assistance to home-care workers.

The politics of doling out dollars

We’ve known for some time this was coming, at least in the sense that the state was billions of dollars ahead of projections on its tax receipts through the early spring. And it remains to be seen what else is counted under the $100-billion “comeback” banner that will be unfurled Monday.

Because much of this money is believed to be a one-time thing, it’s hardly a surprise the governor is focusing first on efforts that don’t grow the long-term size of government.

Critics will no doubt quickly insist that Newsom is handing out money to boost his own political fortunes while facing a recall election this fall. Expect swift criticism from the handful of Republicans who have vowed to run as replacement candidates in the special election.

Some may also question whether the governor’s plan to give $8 billion in mandatory tax rebates meets the spirit of the 1979 ballot measure championed by Gann. When money was returned to taxpayers in 1987, the payments ranged from a low of $32 for individuals to $236 for some families. Democrats insisted in negotiations with then-Gov. George Deukmejian that even Californians who paid no income taxes the year before would receive a small stipend. But those payments were more broad-based than what it appears Newsom is proposing.

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National lightning round

— House Minority Leader Kevin McCarthy (R-Bakersfield) on Sunday publicly endorsed Rep. Elise Stefanik of New York for the post of No. 3 leader, cementing the party conference’s support of the Donald Trump loyalist over Rep. Liz Cheney of Wyoming.

— The Trump Justice Department secretly seized phone records of three Washington Post reporters who covered the investigation into ties between Russia and Trump’s 2016 presidential campaign.

— Biden benefited from high turnout among voters of color and support from college-educated white voters in his 2020 election win, a new study says.

— The Biden administration has withdrawn a Trump-era proposal to expand the amount and types of biometric data collected by U.S. immigration authorities.

— Battles with liberals are enduring and predictable in Texas, but what worries some is the deepening rancor between Republican moderates and right-wing extremists over what America should look, sound and feel like.

— Legislation that would add sexual orientation and gender identity to the Civil Rights Act of 1964 is running aground in the Senate.

— The recent court ruling striking down a national eviction moratorium has heightened concerns that tenants won’t receive tens of billions of dollars in promised federal aid in time to avoid getting kicked out of their homes.

— Though still awaiting money from the latest federal coronavirus relief act, some governors and state lawmakers already are making plans to add the multibillion-dollar boon to their budgets.

— Republicans in Virginia waited in lines hundreds of cars deep to choose nominees for governor and other statewide offices at a drive-through nominating convention Saturday.

— NASA’s new administrator is big on tackling climate and diversifying the agency’s workforce but hedging on whether the U.S. can put astronauts on the moon by 2024.

Today’s essential California politics

— George Skelton writes on how, even as California is rolling in surplus cash, some Democratic legislators still want to raise taxes.

California officials said Friday that a record 1,285 gun-violence restraining orders were issued by judges in California last year, temporarily removing firearms from people deemed a danger.

— With L.A. Mayor Eric Garcetti again in the running for a post in the Biden administration — this time as U.S. ambassador to India — politicians, bureaucrats, activists and others wonder what a mayoral departure would mean for the city’s most pressing issues.

Caitlyn Jenner found out last week that running for governor is trickier than appearing on reality television.

Cruz Reynoso, a son of migrant workers who worked in the fields as a child and went on to become the first Latino state Supreme Court justice in California history, died Friday at age 90.

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