Amid recall efforts, Gov. Gavin Newsom is trying to save his job with a wildly expensive state budget that is driven by a single-time surplus of coronavirus funds and tax revenue.
The proposed plan would provide free health insurance for older illegal immigrants, pay off resident’s delinquent rent and utility bills, extend transitional kindergarten to every 4-year-old, and send another round of $1,100 stimulus to two-thirds of Californians.
Newsom touted the plan as “not just a comeback, but an extraordinary decade, arguably century, ahead,” at a press conference Friday.
“We are trying to do things this state has talked about but never been able to accomplish because we’ve never had the resources to do it,” Newsom said. “This is not a budget that plays small ball. This is not a budget that plays in the margins.”
But the budget largely relies on a one-time $100 billion surplus that includes $27 billion federal stimulus money stemming from the pandemic, and California had to borrow billions to pay an unprecedented amount of unemployment benefits. The unemployment trust is expected to reach $24.3 billion by the end of the year and Newsom’s plan only allocated $1.1 billion to pay down the debt.
The unemployment “deficit is the biggest threat to all businesses in California,” remarked Rob Lapsley, president of the California Business Roundtable. “Without a significant investment from the state to address the massive UI Fund debt, businesses will be on the hook to pay for debt they didn’t create and cannot afford to pay back.”
Most of the deficit comes from fraud, in January, Julie Su, the secretary for the
California Labor and Workforce Development Agency admitted that $11.4 billion in claims were fraudulent and $20 billion in additional claims were flagged as potentially counterfeit.
“There is no sugar coating the reality, California did not have sufficient security measures in place to prevent this level of fraud,” Su said.
Rather than spending cash to beef up security, Newsom’s plan allocates $305 million to hire contractors to clear up the estimated 11 million in outstanding claims and to begin paying benefits through direct deposit to enhance access for foreign language speakers.
The plan also includes $50 million to expand Medi-Cal insurance coverage to undocumented seniors, but the County Health Executives Association of California tweeted they are “deeply dismayed” that the budget didn’t include new money for county health programs.
Newsom wants to spend $12 billion to battle the state’s escalating homelessness crisis, earmarking $3.5 billion to refurbish hotels to create housing. He intends to pay $300 million to wipe out traffic fines for low-income residents, and devote $5.2 billion to pay off delinquent rent and utility bills.
The plan also allocates $4 billion dollars to address the behavioral health of all Californians under 25, $7 billion towards building a broadband network to increase service in rural and tribal areas, and $3.2 billion to expand the state’s zero-emission vehicle goals.