Upper Yard near Max San Quentin State Prison. Photograph by Penni Gladstone.

In summary

Newsom budget priorities stand in contrast with Trump. Trump tax law helps fill state coffers. Prison costs rise as inmate population falls.

Good morning, California.

“You want to know who the homeless czar is? I’m the homeless czar.”—Gov. Gavin Newsom, clearly taking ownership of—and staking his reputation on—what he called the “the issue that defines our times.”

  • In his new budget, Newsom proposes to pour another $1.4 billion into the fight against homelessness.
  • Newsom’s homelessness task force, co-chaired by Sacramento Mayor Darrell Steinberg and L.A. County Supervisor Mark Ridley-Thomas, will deliver its first set of recommendations today.

Newsom, the anti-Trump

Gov. Gavin Newsom presents the 2020-21 state budget at a press conference at the California Capitol on January 10, 2020. Photo by Anne Wernikoff for CalMatters
Gov. Gavin Newsom presents the 2020-21 budget.

Gov. Gavin Newsom’s agenda as spelled out in his budget couldn’t differ more from President Donald Trump’s.

Led by Judy Lin, CalMatters’ staff compiled details of Newsom’s $222.2 billion spending plan for 2020-21, concluding California “is getting the agenda America might have had, had America not elected President Donald Trump.”

  • Newsom: “He’s tweeting. We’re doing something.”

Think homelessness, education, climate, health care and consumer protection.

Newsom countered what he called “California derangement syndrome,” the notion that the Golden State has become a wasteland, by citing stats:

  • Record-low unemployment of 3.9%.
  • 117 consecutive months of job growth.
  • A $19 billion rainy day fund.

Among his many proposals:

  • A $4.75 billion bond for the November ballot to combat climate change.
  • $84 billion for public schools and community colleges, a $2.4 billion boost from this year.
  • $12,600 per K-12 student, an increase of $496 per pupil.
  • Create a Department of Early Childhood Development.
  • $20,000 stipends to teachers who agree to work in low-income schools for at least four years.
  • $895 million for students with disabilities, and $4 million toward dyslexia research.
  • $96 million to raise pay for providers who care for people who are developmentally disabled.
  • $64.2 million to provide health care for 27,000 undocumented immigrants 65 and older.

Noteworthy: Newsom spent almost three hours Friday detailing his budget and answering questions. Reporters ran out of questions.

Why California is flush

California Department of Finance Director Keely Bosler

Think of California’s budget as an economic indicator. Money flows to Sacramento during good times. Recessions bring budgetary pain.

For now, California is flush thanks to the top 1%, the stock market and rising corporate tax collections brought about by tax law changes under President Trump.

Department of Finance experts break it down:

  • Income tax revenue will account for $102.9 billion in the coming year. That’s 67% of the general fund, which pays for most state programs.
  • The top 1% of earners account for 24% of Californians’ total adjusted gross income, and 47% of state income tax payments.
  • Because of the rising stock market, Californians reported $154.9 billion in capital gains in 2019—for which they paid $15.3 billion in state taxes. 
  • By contrast, during the Great Recession in 2009, Californians paid $2.3 billion in taxes on $28.8 billion in capital gains.
  • Sales taxes will generate $28.2 billion for the state, with additional sums going to cities and counties.
  • Sales tax revenue is a declining percentage of state revenue. People purchase services, which generally are not taxed, while goods are subject to sales taxes. (That’s a topic of legislation to come.)
  • Corporate taxes will generate $16 billion in 2020-21, or 10.5% of the general fund, up significantly from recent years.

Because of Trump’s 2017 tax overhaul, many businesses converted to c-corporations, a step that over three years is expected to generate $5 billion in added California revenue. Not that California Democrats are thanking him.

Prison costs rise

Exercise yard at San Quentin Prison.

Gov. Gavin Newsom “will close a state-operated prison within the next five years” if California’s inmate population continues to fall, his budget says.

  • Newsom:  “I want it to happen on my watch.”

What a turnaround it has been from the 1980s and 1990s when California went on a prison-building spree by adding 16 prisons.

  • Prison population has fallen by 50,000 inmates to 124,000 from its height of 174,000 in Gov. Arnold Schwarzenegger’s administration. 

Despite population decreases, Newsom proposes to increase spending on corrections to $13.4 billion from $12.7 billion in the current year.


  • Pay increases for correctional officers
  • More spending on rehabilitation, higher education and expanded visiting privileges for inmates
  • Rising prison health and psychiatric care costs, now totaling $3.6 billion

Hard costs of mental illness

Mental health care costs continue to rise within California’s prisons, as 29% of all inmates are diagnosed with mental illness.

The numbers:

  • 33,621 men, or 27% of male inmates, have a mental illness diagnosis.
  • 6,280 men are so ill that they require enhanced care.
  • 29 men on death row are housed as psychiatric in-patients.
  • 2,462 women, or 44% of women in state prisons, have a mental illness diagnosis, including 173 who require enhanced care.

Gov. Gavin Newsom proposes to spend $758 million on mental health care in state prisons, up from $751 million in the current year. 

  • Included is money to retrofit 64 cells to prevent suicide.

Separately, the state grapples with the thorny issue of people who commit crimes but are deemed to be incompetent to stand trial.

As of December, 800 such individuals were in county jails awaiting beds in state hospitals.

Newsom proposes to spend $364 million over six years to provide beds in communities to house criminals who incompetent to stand trial.

Mental illness law

Humboldt County’s mental health crisis center

While offering no specifics, Gov. Gavin Newsom vowed Friday to “look” at  the 1967 Lanterman-Petris-Short Act, which limits the authority of government officials to detain mentally ill people. 

  • Newsom: “The act was conceived when I was conceived. The world has changed.”

The governor added that more facilities may be needed to care for such people but that it “must be done at the community-based level.”

  • Newsom: “I would hate to go back to the old institutional model, even a modern version, of building huge state-run facilities with locks and keys.”

California state hospitals housed 36,853 people in 1960. 

Now, the few remaining state psychiatric hospitals house 6,700 people, almost all of them mentally ill people who have committed crimes. 

The state hospital budget is projected to be $2.2 billion, up from $1.9 billion this year. 

  • Expects civil libertarians to fight any changes, contending people should not be detained unless they are clearly a danger to themselves or others.

To read CalMatters reporter Jocelyn Wiener’s recent report on the Lanterman-Petris-Short Act, please click here.

The ‘sanctuary’ state

An immigration agent

Making clear that some California constitutional protections extend to undocumented immigrants, a state appellate court has concluded that Huntington Beach and other charter cities must comply with the state’s so-called sanctuary law.

Approved in 2017 in reaction to President Donald Trump’s election, the legislation authored by then-Senate President Pro Tem Kevin de León sought to limit instances in which local law enforcement could assist federal immigration agents in their pursuit of undocumented immigrants.

In a 3-0 decision by Justice Richard Fybel, the California Court of Appeal cited numerous situations in which local cops could assist Immigration authorities. But reversing a lower court decision, the justices also concluded:

  • “Law enforcement agencies throughout the state interact with immigrants. The need for immigrants to report crimes, work with law enforcement, and serve as witnesses, is therefore a statewide, and not purely local, concern.”

Expect an appeal, The San Francisco Chronicle reports.

California: A primer

California state capitol with trees
The California Capitol

If you want to know who is running your state and what they’re doing, check out CalMatters’ essential primer on California governance, focusing on what happened in 2019 and looking ahead to 2020. 

Led by editor Dave Lesher, CalMatters staff identifies the major issues of the day in five concise chapters, and provide a who’s who of the Newsom administration and Legislature. 

Topics range from water, privacy and the gig economy to the most visible problem confronting California, homelessness, plus lesser-known perils such as pension debt. 

We think it would be ideal for high school or college civics classes.

To read it out, please click here.

Waiting for Gov. Newsom

State Sen. Scott Wiener, Democrat of San Francisco. Photo by Robbie Short for CALmatters
State Sen. Scott Wiener, Democrat of San Francisco

In the latest episode of “Gimme Shelter, The California Housing Crisis Podcast,” Sen. Scott Wiener explains the new iteration of his legislation to force cities to allow more apartment buildings around public transit and in single-family neighborhoods.

CalMatters’ Matt Levin and The L.A. Times’ Liam Dillon, the pod’s co-hosts, note that for this, his third try, Wiener has assembled an impressive coalition of supporters but not yet the one who matters most—Gov. Gavin Newsom.

To hear their discussion, please click here.

Commentary at CalMatters

Jody Hudson, Alex Hudson Lyme Foundation: With one unnoticed tick bite, Alex Hudson had gone from a healthy, athletic 12-year-old bundle of energy to bearing a decade-long burden of an incapacitating and unknown disease. I still have many questions about how Alex’s condition could have gone undiagnosed for so long. But I choose to look forward in making a positive change, and not look back at what should have happened in her case.

Dan Walters, CalMatters: State and federal demographers differ on California’s population, and the 2020 census will settle the conflict. California could lose a congressional seat due to slow population growth.


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Dan Morain joined CalMatters in March 2018. He is the former editorial page editor of The Sacramento Bee. Morain also spent 27 years at The Los Angeles Times, and has covered the Capitol since 1992.