The two sides are negotiating California’s budget compromise amid surging unemployment, greater need for services and a deficit of up to $54 billion.
Even with the process controlled entirely by Democrats, a certain degree of tension is wired into the annual ritual of crafting a state budget in Sacramento. The spending plan, after all, is a powerful opportunity for the governor and each house of the Legislature to demonstrate their priorities in caring for 40 million Californians.
So despite lots of common ground on the upcoming budget, some key disagreements have surfaced as legislative leaders and Gov. Gavin Newsom hammer out a final deal in advance of a June 15 deadline.
What is different this time: The two sides are negotiating amid a bleak economic scenario, with surging unemployment, greater demand for government services and a deficit that could be as large as $54 billion. And that, undoubtedly, amps up the stress in their private debates.
“When you are negotiating how to cut up the pie, that is the easiest form of negotiation — particularly when you have a Democratic legislature and a Democratic governor,” said Fabian Núñez, a former Assembly speaker who negotiated five budgets with then-Gov. Arnold Schwarzenegger.
“The challenge is how to make cuts when you don’t have the funds to balance the budget… You could be from the same political party, but the priorities may or may not be the same.”
The fault lines this year show the Legislature and governor at odds over how to manage spending on the coronavirus pandemic, how far the state should go to help undocumented immigrants, and how much to cut schools and safety net programs if the federal government does not come through with additional aid.
While Newsom proposed slashing $14 billion from schools, health care and safety net programs unless the federal government sends funds by July 1, the Legislature’s proposal assumes federal funding will arrive — and if it doesn’t come by Oct. 1, limits cuts to $7 billion by drawing on reserves.
Legislators had made clear in recent weeks that they disliked the way Newsom tied so many cuts to action in Washington, with one Democrat saying the governor’s proposal amounted to “an overdependence on the federal government with an unpredictable administration.”
Lawmakers also blasted Newsom’s administration at a series of recent hearings for leaving them out of the loop on key decisions related to the state’s pandemic response. The nonpartisan Legislative Analyst urged the Legislature to “jealously guard its constitutional role and authority,” so it’s little surprise that lawmakers rejected Newsom’s proposal to give the governor executive power to spend another $2.8 billion related to the coronavirus emergency. Instead, the Legislature’s plan would involve lawmakers in those spending decisions, at least through Aug. 31.
“We anticipate this will be part of our budget discussions,” said Assemblyman Phil Ting, a San Francisco Democrat who chairs the budget committee.
“We are ready to discuss how we can give the governor the proper authority so that he can watch over the state during this COVID-19 pandemic, but at the same time ensure that there’s proper transparency and proper oversight.”
Another schism arose over how much the state should spend to help undocumented immigrants, with lawmakers wanting to go further than Newsom does in extending health care and tax breaks.
During flush economic times in recent years, legislative Democrats won a series of expansions to the Medi-Cal health insurance program for the poor so that undocumented children and young adults could qualify for coverage. They hoped to expand it even further this year — to cover undocumented seniors over age 65 — and Newsom included that in his January budget proposal, at a cost of $64 million a year.
But, faced with a pandemic-induced recession, Newsom pulled back. The Legislature’s plan contains a small compromise: calling for approving the expansion now but not implementing it until 2022.
Lawmakers also want to extend a tax break for low-income workers to include undocumented immigrants with a child under age 6, at a cost of $65 million. Newsom rejected a similar proposal last year.
“There are so many hard-working Californians who are undocumented (and) didn’t get any relief from the federal government,” Ting said.
These negotiations in pursuit of a California budget compromise mark a shift in the relationship between Newsom and the Legislature. As a freshman governor last year, he filled his budget with items lawmakers had tried unsuccessfully to pass for years under Gov. Jerry Brown. Together, Newsom and the Legislature last year expanded child care and health care, made a second year of community college free for some students, repealed taxes on diapers and menstrual products, gave workers more paid time off to bond with a new baby, and committed $2 billion to housing and homelessness.
Now, Newsom will likely be in the role of saying “no” to a bunch of legislators who are unaccustomed to governing during a recession.
“You’re dealing with a generation of elected leaders in Sacramento that probably have not been in a position where they have to make cuts to programs they care about,” said Núñez, the former assembly speaker and a Democrat from Los Angeles.
“So this may be the first time for many, if not most. And that’s going to be difficult.”
In the end, said political analyst Sherry Bebitch Jeffe, when the two sides reach agreement, neither will probably be thrilled.
“The definition of good legislation is a compromise that is mutually repugnant to all sides,” she said. “And that’s what has to happen.”