California senators propose deficit-shrinking budget cuts

The California Senate introduced a plan that would shrink the state’s deficit, but still leave a sizable gap.

Calling it an early stab at the shortfall, Sen. Leader Mike McGuire, D-North Coast, and Senate Budget & Fiscal Review Committee Chair Scott Wiener, D-San Francisco unveiled a plan last week that cuts $17 billion through program reductions and other maneuvers. The plan would tap $12 billion from the state’s rainy-day fund, just $1 billion less than what was included in Gov. Gavin Newsom’s January budget proposal.

The Senate budget committee will discuss the proposal during a hearing on Tuesday. If the governor and Assembly agree to the plan, it could come up for a vote on the Senate floor, according to the statement.

“The quicker we move, the quicker we’ll be able to reduce the deficit,” McGuire said in a statement. “The Senate’s plan to shrink the shortfall protects core programs, includes no new tax increases for Californians, makes necessary reductions, and takes a prudent approach to utilizing the rainy-day fund so we can be prepared for any future tough times.”

Newsom estimated the state’s budget shortfall at $38 billion when he released his budget in January, but the Legislative Analyst’s Office raised its deficit estimate by $15 billion to $73 billion on Feb. 20. The Senate estimates split the difference — adding $15 billion to what it called the governor’s “point in time” estimate to $53 billion.

The vast majority of the solutions in the Senate plan were first proposed by the governor, and include program reductions, borrowing, fund shifts, program delays and deferrals.

Using the governor’s $53 billion deficit estimate, the Senate plan would reduce the shortfall to $24 billion “and enables final budget negotiations later in the year to focus on closing the remaining gap while working to protect the progress to core programs that California has made in recent years,” according to the plan.

The senators said the plan is the first step toward shrinking the deficit and will lead to a balanced 2024-25 budget being adopted in July.

The proposal would leave $13 billion in the rainy-day fund to deal with budget challenges in upcoming years.

“The early actions we’re proposing, including $17 billion in general fund solutions, not only reduce the size of the deficit in this budget year and the next, but also give us more time to develop thoughtful solutions to address the shortfall that will remain,” Wiener said. “Let’s be clear: Shrinking the shortfall early in the process is step one.”

The plan would “ultimately lead to a balanced, on-time responsible budget for 2024-25,” Wiener said. The Senate’s 2024-25 budget plan will be released later in the spring and will provide a comprehensive proposal for a balanced, responsible budget that protects core programs and services and positions the governor and the Legislature to best protect California’s progress, he said.

The early plan includes $3.7 billion in cuts, borrowing, fund shifts and deferrals in the current fiscal year and $13.4 billion in budget solutions for fiscal year 2024-25.

“The deficit we’re facing this year will require big solutions, and I appreciate the Senate’s plan to close California’s budget deficit by $17 billion,” Newsom said in a statement. “I look forward to seeing this proposal move forward quickly.”