By Kahn, Soares, and Conway, LLP
On January 8, 2021, Governor Gavin Newsom presented his proposed $227 billion budget for the 2021-2022 fiscal year, of which $164.5 billion is from the General Fund. The Governor’s proposed budget relies heavily on one-time expenditures, avoiding long-term liabilities, since the State’s out year projections predict reduced revenues. Additionally, the Governor made it clear federal COVID-19 relief assistance is expected to increase spending and that he would work with the Legislature to allocate federal funds as they become available.
The budget reflects $34 billion in budget resiliency – budgetary reserves and discretionary surplus – including: $15.6 billion in the Proposition 2 Budget Stabilization Account (Rainy Day Fund) for fiscal emergencies; $3 billion in the Public School System Stabilization Account; an estimated $2.9 billion in the state’s operating reserve; and $450 million in the Safety Net Reserve. The Administration is predicting a $15 billion surplus.
This proposed budget prioritizes the Governor’s goals of economic recovery, equity, climate resiliency and emergency response. Governor Newsom was clear that every budget allocation was made in an effort to achieve these four goals.
To read the full memo follow this link.
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