Budget Update: May Revise Changes to Wildfire Funding
May 21, 2020
This Informational release provided by: MCWRA Lobbyist Reeb Government Relations, Raquel Ayala, J.D. raquelayala@comcast.net
Last Thursday, May 14, Governor Newsom released the State’s Budget May Revise for Fiscal Year 2020-2021. The Governor began his press conference by reminiscing on the economic health the state enjoyed at the beginning of this year which had allowed him to propose a number of expansions in state services and programs in his January Budget, many of which the state will no longer be able to fund under the state’s new economic reality.
The COVID-19 pandemic and resulting recession has changed the state’s fiscal landscape dramatically. Before the pandemic, California began the year with a $5.6 billion surplus and a projected $21 billion in its “rainy day” fund. Compared to the January forecast, General Fund revenues are projected to decline over $41 billion. This revenue drop, combined with increased costs in health and human services programs and the added costs to address COVID-19, has led to a projected budget deficit of approximately $54 billion before the changes proposed in the May Revision. According to the state’s budget projections, without the actions proposed in the Governor’s revised budget, the state’s out-year structural deficit would be approximately $45 billion annually.
The Governor said that while the state needs to pass a balanced budget by July 1, as required by the state’s constitution, he is looking to a multi-year strategy that includes the following solutions to tackle the state’s $54 billion deficit:
- $8.8 billion from reserve accounts (about 16% of the solution). This includes:
- Pulling down the rainy day reserve by $7.8 billion in FY 2020-21, $5.4 billion in FY 2021-22, and $2.9 billion dollars in FY 2022-23.
- $900 million dollars from the Safety Net Reserve ($450 million to be used in FY 2020-21 and $450 million in FY 2021-22).
- $524 million from the Prop 98 guarantee reserve.
- $8.2 billion from the Federal Cares Act (about 15% of the solution)
- Withdrawal of the vast majority of new programs proposed in January budget (about 15% of the solution)
- Borrowing from special funds and deferral of payments (about 19% of the solution)
- Budget Cuts (about 26% of the solution). In his press conference the Governor said these cuts will come with a caveat: Passage of the Federal New Heroes Act will automatically eliminate these cuts.
- Revenue: Tightening up of Net Operating Losses and Tax Credits (about 8% of the solution)
A day before releasing the May Revise, Newsom spoke in front of a fire truck in El Dorado County, and said that even with a projected$54 billion deficit the state will be stepping up its efforts around wildfire prevention, holding utilities accountable, evacuating people during a fire amid the pandemic and protecting people from earthquakes. He also said that in order to invest in wildfire preparedness there will be cuts in other fire and safety agency areas.
“We’ve got to mitigate and suppress these fires as we move into wildfire season,” he said. “This is a top priority of the state Legislature and our administration.”
So how does the May Revise compare to the Governor’s January Budget Proposal on Wildfire Preparedness?
Click here for the May Revise Changes to Wildfire Funding 2020-21
______________________________________________________________________________________________________________________________________
Upcoming Budget Hearings and Deadline:
The Assembly Budget Subcommittee No. 3 on Resources and Transportation is scheduled to meet this Thursday, May 21 at 10:00a.m., and the Senate Budget Subcommittee No. 2 on Resources, Environmental Protection, Energy and Transportation is scheduled to meet on Sunday, May 24 at 10:00 amto review the Governor’s recently released May Revise.
California’s constitutional deadline to pass a balanced budget is June 15. The state is also constitutionally prohibited from issuing long-term bonds to finance deficits.
Click link for May Revise: http://www.ebudget.ca.gov/
