Will Gavin Newsom spend or save? We find out today

Former Gov. Jerry Brown left office eight years ago with a big surplus and an ominous message in his last state budget: “What’s out there is darkness, uncertainty, decline and recession, so ‘Good luck, baby.’” 

Today Gov. Gavin Newsom is scheduled to present his final state spending plan and he’ll do it with a cloudy crystal ball. 

On the one hand, California’s state finances are flush from the booming stock market and the thriving artificial intelligence companies driving the Bay Area’s economy. Those companies are a gift that keeps on giving to the state budget, especially with an initial public offering just over the horizon for ChatGPT-maker Open AI.

On the other, the Trump administration’s priorities are at odds with Newsom’s, and decisions coming out of the White House are costing California billions of dollars in revenue that was expected for healthcare.

Then there’s the war in Iran, which threatens to trigger a global recession as the stalemate in the Strait of Hormuz continues.

Newsom in January projected a “modest shortfall” of $2.9 billion next year that would grow to a $22 billion deficit in fiscal year 2027-28.

But since then the picture has become a bit rosier. California Assembly budget guru Jason Sisney has noted that income tax collections are coming almost $11 billion over what Newsom anticipated five months ago.

The Legislative Analyst’s Office also revised its revenue forecast, finding the state is likely to collect about $25 billion more over a three-year budgeting window than previously projected.

How much will Newsom want to spend and how much will he sock away to cushion what may come for his successor? We’ll find out today. Check back at CalMatters.org for updates. Our Yue Stella Yu will be anchoring coverage. 

Speaking of state spending: California climate regulators are proposing to change the state’s carbon market in ways that could cut revenues in half — leaving no funding at all for safe drinking water, fire resilience and other programs. Read more from CalMatters’ Rachel Becker.

California just finished writing new rules for plastics recycling that demand more from manufacturers and less from consumers. They’re among the toughest regulations in the country. And while it’s no surprise that plastic producers are pushing back against the regulations, why are environmental groups threatening to sue over them?

As CalMatters’ Alejandra Reyes-Velarde explains, plastic producers will be required by 2032 to make all their packaging recyclable or compostable. They’ll also have to pay $5 billion over a decade for the environmental damage their products have caused to communities.

But the rules also allow some materials with unique technical challenges, as well as plastic that federal law requires for food safety, to apply for exemptions. It also allows certain waste polluting technologies to count as recycling, as long as companies have a hazardous waste permit.

Because of these exemptions, two environmental groups — the Natural Resources Defense Council and Californians Against Waste — said they plan to take California to court.

• Nick Lapis, director of advocacy for Californians Against Waste, in a statement: “These regulations … create permanent escape hatches the law never authorized.”

Read more.

The federal report that pulls together each state’s “point-in-time count” on homelessness provides a critical snapshot of the number of unhoused people nationwide. But there’s one big problem with the latest report, writes CalMatters’ Marisa Kendall: The feds haven’t released it.

The U.S. Department of Housing and Urban Development requires cities, counties and states to count their homeless populations every other year. Each region must submit their count to HUD by the spring. HUD then verifies the data, tallies the total count and submits a public report to Congress — which typically happens in December.

But it’s been five months and there hasn’t been a peep from HUD. 

• Jesse Rabinowitz, spokesperson for the National Homelessness Law Center: “This is, by what I can tell, the latest any point-in-time count has ever come out, including the years where it was delayed during COVID.”

The report guides how homelessness funding is allocated, shapes policy decisions and provides state-by-state comparisons. Though California has tallied its own data, its analysis doesn’t include information including race, age and mental health status like the official federal report. 

Read more.

San Diego County leaders want to update the county’s charter to make the local government run more efficiently. But not everyone is in agreement: While one county board member wants to give supervisors longer term limits and more say over senior staff, another is labeling the proposal “a rushed power grab.” Read more from CalMatters’ Deborah Brennan.