Sacramento – Yesterday, Governor Newsom released his proposed budget in response to California’s fiscal shortfall. Assemblyman Mathis issued the following statement about key aspects of his budget proposal and our State’s overall fiscal situation:
“The Governor’s proposed budget proposal for the 2024-2025 fiscal year leaves us with more questions than answers. The Governor claims that our actual fiscal shortfall is $37.9 Billion while the nonpartisan Legislative Analysts’ Office projects the shortfall to be approximately $68 Billion so there seems to be a huge discrepancy between the comparatively rosy projections pushed by the Governor and the actual numbers estimated by the experts. In my almost 10 years in the Legislature, the LAO tends to be more accurate than the Governor’s Office when it comes to calculating the budget shortfall and revenue predictions. The Governor also discussed some key topics impacting our State and I want to break down how his solutions are inadequate to solve these pressing issues.
PUBLIC SAFETY
“When the Governor released his public safety budget plan, my first thought was ‘Is this a joke?’ Investing just $1.1 Billion over a period of 4 years is a completely inadequate sum that will not reverse the rapid increase in crime. In 2022, violent crime rates dropped across the US yet they rose here in California, according to the FBI. 2023 will almost certainly show a similar increase in violent crime in California. Not only does the Governor invest an inadequate amount of resources into public safety, he refuses to change the laws that would actually empower our police and justice system to arrest and properly prosecute lawbreakers. The most important job of the government is to keep its citizens safe and our State is failing to live up to its primary responsibility. Our small business owners are demanding the State take action to counter the explosion in robberies but the Governor’s allocation of just $374 Million dollars, spread out over 4 years, to fight retail theft ensures that the criminals will continue to rob businesses and receive little to no accountability. A surprising bright spot in the Governor’s budget is his $230 Million commitment to fight the spread of opioid & fentanyl, including by deploying the National Guard to engage in drug interdiction & enforcement operations across California. The Governor seems to understand the threat of overdoses by calling to invest $151 Million in the distribution of naloxone. If the Governor is serious about ending the threat posed by opioid and fentanyl trafficking, I look forward to working with his Office to make sure we hold the traffickers accountable. The majority party in the Legislature is adamantly opposed to measures that would increase penalties for criminals so I do hope the Governor is willing to pressure members of his Party to work with us to ensure that all Californians are able to live in safety.”
TAXES
“Governor Newsom was correct to point out that our State has one of the most volatile tax systems in the country. It’s very cyclical and highly dependent on the revenues of those invested in the stock market. Our severe vulnerability to the boom-and-bust economic cycle makes it hard for us to plan long-term investments in our public services. We also have some of the highest income taxes in the nation, stifling much-needed investment and job opportunities for Californians. Instead of raising the revenues needed to fund a giant social safety net as we were promised, these high taxes just encourage Californians to flee the state and take their money with them. Unfortunately, Governor Newsom’s budget does nothing to alter California’s cyclical and restrictive tax environment. Businesses and residents will continue to flee the state, making it more likely that the Legislature will just raise taxes on those who remain, which only furthers the vicious cycle of mass exodus and raising taxes. I was pleased to hear that the Governor empathetically rejected the proposal to create a so-called “wealth tax”, which would have depressed tax revenues and business investment in the long term as more businesses and individuals flee the state to avoid the new tax. If the Governor hopes to institute a tax system that encourages growth and investment, I stand willing to work with him to reform our tax structure so we can incentivize businesses and residents to stay in the State.”
EDUCATION
“The Governor proposed to spend about $127 Billion on education but unfortunately refused to change how we spend that money. Despite spending hundreds of billions on public education, California’s education system hasn’t delivered on its bold promises. Under 1 in 4 students are proficient in math while under 1 in 3 students are proficient in reading so there is clearly a huge disconnect between the money that we are spending and the results that we are getting. We need to ensure that underperforming schools are held accountable so that we have the best teachers in the classroom. At the same time, we must ensure that parents have greater choice in deciding where they would like to send their children to schools. Schools must have an incentive to improve their performance yet the Governor refuses to take on the special interests who fight any real reform. I also saw that the Governor proposed spending over $13 Billion on learning loss recovery, presumably to compensate for the learning losses we saw among students during COVID. This is just another unfortunate consequence of the Governor’s decision to keep our kids out of school for over 2 years. It’s important that we properly train our youth to take on the challenges of the future and we need a strong education system to prepare them.”
HOUSING & HOMELESSNESS
“One of the main reasons we see roadblocks to housing development in our state is because of the very restrictive regulatory environment that we impose on our builders. As a result, our State has some of the highest housing costs in the nation. For years, Republicans in the Legislature have been pushing bills to reduce the regulatory burdens imposed on housing construction but they either get shot down by the majority party or modified in such a way to not make a real difference. This has contributed to pricing students out of their apartments to where they are forced to live out of their cars. We account for about 12% of the country’s population yet we have about 30% of its homeless population despite the tens of billions the Governor has dedicated to fighting homelessness. As California’s homelessness continues to rise out of control, the rest of the nation’s homelessness is declining. This is a disaster and unfortunately, the Governor’s budget continues to dump more money into the issue without reforming how we spend that money. Continuing to throw money at the wall hoping something will stick is a terrible strategy. The rising homelessness has brought about serious sanitary and safety issues for Californians who are already struggling to get by. If the Governor is serious about tackling the housing and homelessness crisis, he will agree to work across the aisle with us to minimize permitting regulations, increase the housing supply and make sure all Californians are able to afford a place to live without straining their budgets.”
“There are plenty of other issues that I have with the budget proposal from the Governor but these are the ones that stuck out the most to me. Instead of looking at the $48 Billion “California climate commitment” in his budget, Governor Newsom chooses to tap over $13 Billion from our Rainy Day Fund, a fund that we would need should we enter an economic downturn. The Governor has promised to declare a fiscal emergency at some unspecified time in the future when we need an emergency declaration now. His budget relies on accounting gimmicks and projects an unrealistically optimistic tax collection season to the point where the Legislative Analysts’ Office even had to push back on it. There are plenty of states who have low taxes, are able to adequately fund public services, and don’t run a massive budget deficit like we do. This is fiscal mismanagement of the highest order and unfortunately the Governor chooses to work solely with the same people in the Legislature who created this problem rather than involve the minority party to help solve this fiscal emergency.”
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