Newsom, State Legislature Agree To $310 Billion Spending Plan

SACRAMENTO, Calif. (AP) — California Gov. Gavin Newsom and the Democrats who control the state Legislature agreed late Monday on how to spend $310.8 billion over the next year, endorsing a plan that covers a nearly $32 billion budget deficit without raiding the state’s savings account. The nation’s most populous state has had combined budget surpluses of well over $100 billion in the past few years, using that money to greatly expand government. But this year, revenues slowed as inflation soared and the stock market struggled. California gets most of its revenue from taxes paid by the wealthy, making it more vulnerable to changes in the economy than other states. Last month, the Newsom administration estimated the state’s spending would exceed revenues by over $30 billion. The budget, which lawmakers are scheduled to vote on this week, covers that deficit by cutting some spending — about $8 billion — while delaying other spending and shifting some expenses to other funds. The plan would borrow $6.1 billion and would set aside $37.8 billion in reserves, the most ever. Republicans criticized the budget plan as unsustainable, noting it would leave the state with projected multi-billion dollar deficits over the next few years. They said the state’s gas tax is scheduled to increase on Saturday, an automatic adjustment that is tied to inflation. Republicans have repeatedly tried to halt those increases, but to no avail. Budget talks stalled over the weekend as Newsom sought major changes to the state’s building and permitting process. Newsom said the changes are needed to speed up vital construction projects, including expanding the state’s energy capacity and upgrading the state’s aging water infrastructure. But a group of lawmakers from the Central Valley feared Newsom was using the proposal to push through a long-delayed project to build a giant tunnel to send water to Southern California. In the end, Newsom got most of the changes he wanted — but lawmakers made sure the changes wouldn’t benefit the tunnel project.