“We are able to meet this challenge thanks to our responsible fiscal stewardship over the past years, including record budget reserves of close to $38 billion.”
The agreement was reached following weeks of revisions to a proposal laid out by Democratic lawmakers in the Senate in March. The plan will be considered by the Legislature’s budget committees in the coming days and could see a vote by the Assembly and Senate as early as April 11, according to the governor.
He said more adjustments to the budget will be needed in the coming months, with a revision scheduled for May that will outline his plan to address the deficit.
“There is still work to do as we finalize the budget, and I look forward to the work ahead together to continue building the California of the future,” Mr. Newsom said.
Seeking to expedite the budgeting process, the package includes a combination of $3.6 billion in reductions—most from one-time funding obligations—$5.2 billion in revenue solutions and borrowing, $3.1 billion in delays, $2.1 billion in deferrals, and about $3.4 billion in cost shifts from the state’s general fund to other funding mechanisms.
The largest reductions—about $762.5 million—will come from salary savings from vacant positions in departments across the state that will not be filled. About $500 million will be cut from the state’s school facility aid program.
Approximately $19 billion—about half of the state’s reserves—will be tapped to help close the gap while “protecting core programs,” according to the governor’s announcement.
Senate President pro Tempore Mike McGuire said that by acting quickly, lawmakers can better manage the deficit.
“We are all committed to delivering an on-time balanced budget, and this early action agreement is a critical first step to shrink the state’s shortfall,” Mr. McGuire said in the governor’s press release. “The Senate will be taking budget votes next week to get this deal across the finish line, and I’m grateful to the governor, speaker, and the entire Senate Budget Committee for their partnership.”
He said a comprehensive plan is in the works and will be released in the coming weeks.
“Next up: The Senate will be developing our final action budget plan, which we’ll release later this spring,” Mr. McGuire said. “It will be our roadmap to tackle the remaining budget deficit and adopting an overall state budget.”
The leader of the Assembly said the mixture of ideas will help address the deficit while giving lawmakers more leeway to identify solutions before the budget is passed in June.
“I’m proud of our Assembly Democratic Caucus for their commitment to a transparent, deliberative budget process,” Assembly Speaker Robert Rivas said in the same press release. “It’s the right way to come at closing such a massive shortfall, along with freezing some undisbursed, one-time spending to preserve more options in June.”
He anticipated more cuts in the governor’s May revision.
“We expect the governor to deliver challenging budget proposals next month to reduce the deficit in the long term, and we’ll consider them carefully,” Mr. Rivas said. “Together, we can deliver real solutions for hard-working Californians.”
One Democratic colleague noted the difficult task ahead and acknowledged that making such cuts is never desirable but is a necessary part of the process given the state’s fiscal dilemma.
Some Republican lawmakers vented frustration with the agreement, with one critic calling the deal a “field of schemes.”
“With a $73 billion deficit, this gimmicky agreement is not the home run Gavin thinks it is,” Mr. Gallagher said. “The emotional, real truth of this budget is visceral to the Californians who will pay the price for Newsom’s delusions and exaggerations.”
Another critic argued that the process excluded Republican voices and called for more transparency and inclusiveness.
“The budget process has been degraded in the last several years with unilateral decision-making happening behind closed doors by one political party,” Republican state Sen. Roger Niello said in a March 20 press release after Democratic Senators’ budget cut proposal was first released.
“The fact remains that the state is facing a major deficit that has continued to grow, and this process should be open, transparent, and deliberative.”
He expressed dismay with the situation and said Californians are left out of the conversation while the supermajority dictates policies.
“I am disappointed in this administration on behalf of the people of California,” Mr. Niello said. “Not allowing public discussions or different viewpoints to weigh in is a disservice to the millions of Californians we represent and erosion of democracy.”
