With a budget deficit of at least $38 billion hanging over their heads, Gov. Gavin Newsom and Democratic leaders in the state Senate and Assembly announced an agreement Wednesday to take action in April to begin significantly reducing California's historic deficit.
The problem: Democrats in the state Capitol couldn't actually agree on an amount — offering only a range of $12 billion to $18 billion — or explain exactly what they plan to cut.
These details will be discussed and shared next month, the governor's office said.
The surprise announcement of a plan comes as pressure mounts on Democrats over the looming financial crisis.
Newsom urged the Legislature to take “early action” to start reducing the deficit now — before the June deadline to pass the budget — by recovering unspent funding, delaying programs and cutting planned spending. The cuts currently under discussion are largely considered the easier options, hopefully freeing up Democrats to focus on tougher deliberations that will come later this spring when the full extent of the budget hole becomes clearer.
The Senate unveiled its own plan last week to cut $17 billion from the deficit through early cuts, which include delaying and withdrawing more than $1 billion to expand early learning classrooms and support school facilities. But the Assembly, where Democrats hold 62 of 80 seats under a new president who has promised to give its members more say in big decisions, has been slower to rally behind the plan.
The struggle to reach real consensus on early cuts reflects the challenge that lies ahead as Democrats embark on a process to correct what could be the largest fiscal deficit state government has ever seen. Some estimates suggest the shortfall could be nearly double Newsom's estimate, which will force lawmakers to make tough choices in May and June about programs that affect millions of Californians.
Democrats often pass an initial budget by the June 15 deadline required by state law and review it again before the fiscal plan takes effect on July 15.
“In some ways, I think this forces us to do an early reckoning with the reality of what they're actually going to have to vote on,” said Rob Stutzman, a longtime GOP strategist who worked for Gov. Arnold Schwarzenegger. “And they will own it all.”
While Republicans shared the pain during the Schwarzenegger-era budget crisis, Democrats now control the governor's office and both chambers of the Legislature by wide margins.
Only a few lawmakers have experience in office during the previous budget crisis, and Newsom has never had to make cuts of this magnitude.
His call for early deficit reduction has been met with mixed reactions from the Legislature, prompting Newsom to come to the Capitol this week for meetings with Senate Democrats and the Assembly leader in hopes of reaching a deal before they leave Sacramento for spring break. Thursday. Lawmakers are expected to approve one of Newsom's main budget proposals before the recess, a tax increase on managed care organizations that would allow the state to attract more federal money for health care.
In a statement announcing the agreement, California Senate President Pro Tem Mike McGuire (D-Healdsburg) said the Senate is ready to move quickly on difficult budget decisions.
“The deficit is serious and has increased by billions since January, which is why we must act quickly to reduce the deficit immediately,” McGuire said.
The Senate's plan to cut $17 billion, coupled with a desire to tap a $12.2 billion rainy day fund, could leave lawmakers with $29 billion less to make up for in June.
Newsom's Treasury Department said the governor's administration supports the Senate package. But the General Assembly has not yet made clear how it wants to move forward.
House Budget Chairman, Assemblyman Jesse Gabriel (D-Encino), held a news conference on Friday and said the Assembly appreciates the proposals from the governor and Senate, but also needs more time.
“We value the process and we value the time to consider all of these trade-offs,” Gabriel said.
Gabriel said the association intends to submit its proposal in April. He said he expected the association to take some early action but also saw advantages in waiting until June to get more certainty about the size of the deficit.
In a statement issued Wednesday with the vague announcement of a prospective agreement, Assembly Speaker Robert Rivas (D-Hollister) praised the agreement as an “important first step” and said that “the Assembly is committed to a deliberative and transparent budget process that strongly protects Democrats.” Working Californians.”
But the lack of detail in the announcement of the cuts being considered by Democratic leaders is an example of just the opposite, Sen. Roger W. Nilo, R-Fair Oaks and vice chairman of the Senate Budget Committee, said in a statement. He described this as “unilateral decision-making taking place behind closed doors by one political party.”
