Lawmakers Unveil State Budget Legislation With More Expected Revenue Than Governor’s Proposal

State legislators took their first step this week toward approving a state budget for the coming fiscal year, introducing budget legislation with even higher revenue projections than the governor’s revised proposal.

State Sen. Nancy Skinner, D-Oakland, and Assemblyman Phil Ting, D-San Francisco, announced the budget legislation Tuesday, roughly two weeks before the June 15 deadline when state officials are required to approve the budget.

The Legislature’s proposal includes many facets of Gov. Gavin Newsom’s May budget revision, including billions of dollars in spending for education, reducing homelessness, building affordable housing and sending $600 stimulus checks to people who made $75,000 or less last year.

The proposal is based on projected annual revenues pushing past $200 billion by the 2024-2025 fiscal year, which is roughly $20 billion more than the projections in Newsom’s revised proposal from last month that were based on data from the state’s Department of Finance.

Skinner and Ting, who chair the budget committees in their respective legislative chambers, said the higher revenue projections come from the Legislative Analyst’s Office rather than those from the Department of Finance, which are not as optimistic about increases in the state’s capital gains revenue in the coming years.

“We are confident about that because the LAO’s estimates (in recent years) have been much more accurate than the estimates that our Department of Finance has used,” Skinner said Tuesday during a media briefing on the budget proposal.

“If anything, our LAO revenue estimates have been below the actual revenue we’ve achieved,” she said.

The proposal also includes the reversal of spending cuts for things like social programs that were adopted more than a decade ago during the Great Recession, efforts to reduce out-of-state enrollment in the University of California and California State University systems and some fiscal sleight of hand to stay under the state’s Constitutional spending limit, known as the “Gann Limit.”

The limit comes from a 1979 voter-approved ballot measure that puts an annual limit on government spending and is named for conservative activist Paul Gann, who campaigned for the measure. When the limit is reached, the remaining money must be returned to taxpayers.

Newsom’s May revise had been roughly $16 billion over the limit, and state officials had argued that the $12 billion allocated to fund the stimulus checks would functionally act as a rebate of taxpayer dollars under the Gann Limit.

Legislators argued, however, that the stimulus checks in their proposal functioned as a loss of revenue rather than collecting tax dollars only to redistribute them.

Because of this, Skinner and Ting said the Legislature’s proposal does not surpass the Gann Limit.

“While there might be a difference in architecture … the budgets really reflect pretty much the same priorities and values,” between the Legislature and Newsom’s administration, Skinner said.