Jon Coupal: Gavin Newsom’s seriously unserious budget proposal
In politics, it’s good to remember that things often don’t mean what you think they mean. A good example of that is the state budget. The California Constitution requires the state to have a balanced budget, but the whole process is a complete farce. Here’s why.
When Gov. Gavin Newsom announced his proposed budget in January, he claimed that the state had a “modest surplus.” But how could we have a surplus when he proposed to pull $7.1 billion from reserves?
Then came the May Revise of the budget last week. That’s when the budget the governor proposed in January gets revised based on the latest revenue projections. Now we have a $12-to-14-billion-dollar budget “problem.” (“Problem” here is defined as having an insufficient level of revenue increases year-over-year to satisfy a spending addition).
And why do we have a deficit? According to Newsom, it’s Trump’s fault.
“California is under assault, the United States of America in many respects is under assault, because we have a president that’s been reckless in terms of assaulting those growth engines and has created a climate of deep uncertainty,” Newsom told reporters. “The impacts are being felt disproportionately in the fourth-largest economy in the world.”
But what the governor is calling a “Trump slump” is pure gaslighting because California’s “problems” are entirely self-inflicted.
Let’s take you back to the 2022-2023 budget. Coming off the COVID-19 pandemic, the stock market surged, and the state saw a sizeable increase in revenue from income taxes. It resulted in a projected surplus of $97 billion, the largest in state history.
Then they spent it.
State lawmakers passed a $308 billion dollar budget. A more than $30 billion dollar increase over the previous year’s budget and $22 billion more than had been originally proposed. Newsom called it an “unprecedented generational and transformational budget.”
But the projected surplus never became reality.
“Revenues never reached the elevated level he had assumed,” Dan Walters recently wrote in an op-ed for CalMatters. “Last year, buried in the fine print, the 2024-25 budget acknowledged the error and estimated it to be $165.1 billion over four years.”
Rather than correct the mistake, the governor and legislature have continued to paper over the problem by moving money around, increased borrowing and other budget gimmicks.
Meanwhile, the spending spree continues. The governor proposes total state spending of $322 billion in 2025-26. That’s the second largest budget in state history (the largest was the 2024-25 budget) and does nothing to solve the state’s ongoing shortfall, with annual deficits projected to range from $13 billion to $19 billion in future years.
So how can the budget be balanced? Well, because they say so. In 2010, voters passed the “On-Time Budget Act.” It said that in exchange for lowering the threshold to pass the budget from two-thirds to a simple majority, legislators would forfeit their pay if they did not pass a budget on time (by June 15).
In 2014, the legislature passed a budget that then-State Controller John Chiang argued contained a $1.85 billion deficit and, by violating the constitutional requirement that the budget be balanced, was not a legal budget. He withheld their pay.
The legislature sued and the Third District Court of Appeal in its Steinberg v. Chiang decision said that only the legislature can decide what is and isn’t a balanced budget. So long as expenditures in the budget bill don’t exceed their revenue estimates, it’s balanced.
But as we’ve seen, that’s a recipe for disaster.
If you let politicians “estimate” how much money they have to spend, they can spend money like drunken sailors, every year, until they’ve run up a tab that even the Pentagon budget couldn’t cover.
That’s when the politicians start complaining that more people need to pay their “fair share.”
There’s nothing fair about it. They have the party and taxpayers get the hangover.
Jon Coupal is president of the Howard Jarvis Taxpayers Association.