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By Tim Hunt

Time to make a budget deal

Uploaded: Jun 11, 2019

With the constitutional deadline for approving the budget looming Saturday, Gov. Gavin Newsom and Democrat legislative leaders cut deals last weekend. The deadline contains a big stick—pay is docked for every day the budget is late so deals are made.

Notable was the continuing effort to throw out the welcome mat for illegal immigrants. California already is a sanctuary state and the budget deal will provide illegal aliens up to the age of 26 with medical coverage. Minors already are covered.

In their effort to continue California’s version of Obama Care, the deal establishes a fine of $695 for residents who cannot prove they have health insurance. Proceeds are supposed to go to a fund to subsidize insurance for middle income residents.
The budget deal also continues to treat the state’s climate change cap-and-trade money as the piggybank to raid. Former Gov. Brown convinced the Legislature to devote 25 percent of the revenue to his absurd high-speed rail project—that funding has propped up a horrible project that simply should go away.
This time around, Gov. Newsom and the Democrats (who hold a two-thirds majority in both houses) diverted $130 million of those funds to provide clean drinking water to the estimated million state residents who are served by wells or small water systems that cannot treat water to drinking water standards. Many are in small, rural communities in the San Joaquin Valley.
The governor originally had proposed a statewide monthly tax on all water users, a recommendation that was strongly opposed by water agencies as well as legislators. Opponents acknowledged the issue and the need to deal with it, but objected to another tax with the state gushing revenue and a strong surplus.
The healthy revenue, most coming from wealthy Californians (the top 1 percent pay about half of the state’s income tax), has allowed Newsom to continue to build the rainy day surplus fund that Brown pushed so hard to increase. The current economic expansion will become the longest ever this summer and both Brown and Newsom warned it cannot last forever. The $213 billion budget includes a $21 billion reserve.
It’s also notable that neither the governor nor legislators established expensive new ongoing programs with so much cash on hand. That restraint will be rewarded come the day the economy slows, initial public offerings (which will be a substantial windfall in 2020 given the number that have occurred or are planned this year) slow and revenues drop.