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California lawmakers back cuts for nearly $300 billion budget

By Mark Moran & Allen Cone
California Gov. Gavin Newsom speaks during the Asia-Pacific Economic Cooperation Economic Leaders Week in 2023. Newsom and legislators reached a $300 billion budget deal. Photo by Justin Tafoya/U.S. Department of State/UPI
California Gov. Gavin Newsom speaks during the Asia-Pacific Economic Cooperation Economic Leaders Week in 2023. Newsom and legislators reached a $300 billion budget deal. Photo by Justin Tafoya/U.S. Department of State/UPI | License Photo

June 23 (UPI) -- California lawmakers announced a $297.9 billion budget Saturday, with a focus on closing a $47 billion shortfall, including across-the-board cuts of nearly 8% to every department.

The spending plan prioritizes everyday operational costs, continues a state homelessness grant, proposes cuts in the prison budget and delays the start of a healthcare worker minimum wage increase to $25 until October.

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The budget pulls $12.2 billion from the state's rainy day fund over the next two years and seeks a constitutional amendment in 2026 to grow the surplus fund.

Funding for municipalities to combat homelessness remains at $1 billion but will be tied to accountability measures.

Gov. Gov. Gavin Newsom is pleased with the budget

"This agreement sets the state on a path for long-term fiscal stability - addressing the current shortfall and strengthening budget resilience down the road. We're making sure to preserve programs that serve millions of Californians, including key funding for education, healthcare, expanded behavioral health services and combatting homelessness," Newsom said. "I'm grateful for the partnership of our legislative leaders in meeting this challenge with balanced solutions that continue to make progress on California's priorities."

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The budget will provide a spending plan for the 2024-25 fiscal year, which begins July 1. California has the fifth-largest economy in the world.

"We secured crucial investments to lower housing costs and keep people in their homes, and to sustain essential programs that help vulnerable families thrive," Assembly Speaker Robert Rivas, a Democrat, said in a statement.

The budget agreement proposes cuts of $1.1 billion for affordable housing and $750 million to the California Department of Corrections and Rehabilitation's prison system.

That's more than Newsom wanted, but the budget does include his proposal to save $82 million by ending the use of 46 housing units in 13 prisons, totaling 4,600 beds, according to the Assembly report.

"The protection of these services will help ensure thousands of California residents remain safe, cared for and without fear of falling deeper into poverty," Eileen Cubanski, who is of the plan to cut social services in the budget.

The proposal also calls for spending 8% of the state's reserves to close the deficit. The across-the-board cuts, including personnel, contracting and not filling vacant positions, represent a saving of $2 billion from the general fund.

Lawmakers compromised with Newsom on some key issues, including putting money aside for healthcare provider rate increases for providers who serve patients enrolled in Medi-Cal. Newsom wanted to cancel those increases. They also came to terms on the speed at which the state will suspend tax credits and a deduction for operating losses for business.

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