ITUP Blog: Key Items in the May Revise
By Katie Heidorn, Garrett Hall, and Marissa Kraynak
May Revision
On May 14, 2020, Governor Newsom released his May Revision, a drastically reduced budget proposal due to the COVID-19 pandemic of $203 billion ($133.9 billion General Fund), down from a January proposal of $222.2 billion ($153 billion General Fund). The budget reductions are the result of a projected $54 billion deficit, as estimated in the Department of Finance’s (DOF) recently released Fiscal Update. The Legislative Analyst’s Office (LAO) also predicted a budget shortfall of $18 billion to $31 billion in their Fiscal Outlook, released May 8, 2020. Prior to the May Revision’s release, ITUP published a Five Topics to Watch Blog, highlighting topics to watch in the May Revision. This blog outlines how those topics fared in the new budget proposal and key items of the Health and Human Services section of the Governor’s May Revision. Additionally, at the end of this blog, we have listed some key government budget resources where you can find quick links to both summary level and detailed information on the state budget.
What’s Next
Legislative Budget Hearings and a Balanced Budget: Over the coming weeks, the Legislature will hold hearings on the budget and advocacy and interest groups will lobby both the Legislature and the Administration to ensure decisionmakers hear their perspectives. The Legislature and the Governor will then negotiate to produce a final budget. The Legislature is required to produce a “balanced budget” and send it to the Governor by Monday, June 15, 2020. Due to the requirement that a bill be in print for at least 72 hours prior to legislative action, watch for the budget bill to be in print by Friday, June 12, so that it can be sent to the Governor on June 15. The Governor then has 15 days to sign it so that it will be law by Wednesday, July 1, 2020, the start of the new fiscal year.
“Budget Bill Junior”/Budget Updates Later in the Year: Much of the difficulty in predicting the state’s budget deficit centers on the delay in tax payments for 2019 from April 15, 2020, to July 15, 2020. Once the Franchise Tax Board has received all 2019 tax payments and tallied them, there will be more information on the actual budget deficit. Additionally, this summer there may be more information on additional federal stimulus monies flowing to states, as the Governor discussed during his May Revision press conference. In late July/August, watch for new projections from DOF and the LAO based on this new information. Any changes to the budget would be made in a “Budget Bill Junior”. During the last recession, addressing the budget deficit was a multi-year process.
Topics to Watch and Their Status in the May Revision:
1. General Fund Cut/Solutions Proposals and Other Budget-Savings Mechanisms
Budget Savings Mechanisms: The May Revision proposes many budget cuts/solutions and notes that the recovery effort will require a multi-year strategy similar to the one used during the last recession. They include spending down the $16 billion in the Budget Stabilization Account and Safety Net Reserve; withdrawing billions of dollars in programs that were proposed in the January 10 version of the budget; making cuts to many programs, including in education, health, and human services areas; and, accepting federal stimulus monies. For more details, please see the Introduction section of the May Revision Summary document.
Health and Human Services Cuts: The May Revision would allow many of the cuts to health and human services programs to be reversed through what are referred to as “trigger restorations”. If Congress adopts and the President signs into law additional federal funding through the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, funding would be “triggered on” for many of the programs proposed to be cut.
