Here's What's In Governor Gavin Newsom's $222 Billion California Budget Proposal

Jan 10, 2020

California Gov. Gavin Newsom introduced a $222.2 billion state budget proposal Friday, including a projected $5.6 billion surplus.

Earlier in the week, Newsom outlined a number of proposals related to homelessness, wildfires and drug pricing, which were officially introduced in the budget.

Here's a look at his main proposals (or read the governor's budget summary here):

Homelessness

To tackle the state’s mounting homelessness crisis, Newsom’s budget includes $750 million in one-time spending to create the California Access to Housing and Services Fund. Its goal is to “reduce homelessness by moving individuals and families into stable housing” both for those who are homeless and at risk of becoming homeless, according to a budget summary. The money would be used to pay for rental assistance and encourage the construction of more housing for homeless people. 

The spending plan also includes $695 million to transform Medi-Cal to address health needs for the state’s chronically unsheltered homeless people, meaning those who live on the streets, cars or abandoned buildings. Earlier in the week, Newsom issued an executive order requiring agencies to review available state land for shelters and housing.

“On the issue of homelessness, we are investing over a billion dollars yet again to address the issue that defines our times,” Newsom said.

 

Health Care Access and Affordability

Newsom vowed to bring down health care costs for all Californians by expanding Medi-Cal — the state’s low-income health program —to undocumented seniors, simplifying the Medi-Cal system and restructuring the way the state purchases prescription drugs, among other changes.

There are several newly funded initiatives tackling prescription drug prices, including creating a generic drug label for California, making the state the sole drug purchaser for all public and private plans and capping what the state pays for drugs based on international retail prices.

The governor allocated $168 billion to the Department of Health and Human Services, with nearly 62% of that total going to Medi-Cal. No other category got more than a 10% share of the total health budget. 

More than $80 million in Medi-Cal funding will go toward expanding the program to an estimated 27,000 undocumented people aged 65 and older starting 2021. Seniors are a relatively small group compared to the rest of the undocumented population, but they have some of the most serious health needs

The budget allocates $695 million — growing to $1.4 billion by 2023 — toward the Medi-Cal Healthier California for All Initiative, an effort to consolidate the many systems that Medi-Cal patients have to navigate to get services and better manage the care provided to enrollees. Medi-Cal has come under fire in recent years for not adequately connecting patients to needed services including dental care, behavioral health care and child check-ups. 

Newsom is also creating a new Office of Health Equity, with the goal of  increasing price transparency in health care and cracking down on hospital consolidation.

Infrastructure

The budget also lays out a $53 billion 2020 Five-Year Infrastructure Plan. More than 75 percent of the proposed funding would go to transportation, which makes up 40 percent of the state's carbon emissions. It also includes housing, water, and energy.

The plan is for state and local governments to “work towards a future” where Californians can “thrive in the face of climate change” while remaining economically stable.

To do this the administration is proposing $12 billion over the next five years for a Climate Budget — this mixes Greenhouse Gas Reduction Fund investments, a new climate resilience bond and the revolving loan fund. The climate resilience bond would provide $4.75 billion for investments that reduce risks from water, fire, extreme heat and sea level rise.

Wildfires and Utilities

The proposed $4.75 billion climate resiliency bond, aimed at the November ballot, would include $750 million to harden critical infrastructure in communities facing wildfire risk and improve forest health.

Newsom is also proposing $1 billion to increase firefighter capacity, the number of year-round engines, and investing in technology to analyze data on wildfire risk. The state would phase in over 650 positions over five years. The goal is to provide Cal Fire more flexibility when fire season peaks. 

The budget would create a Wildfire Forecast and Threat Intelligence Integration Center to provide information about wildfire threats to government agencies and serve as a hub for forecasting weather information and threats. This includes $9 million and 22 positions to staff the center.

Newsom says he is committed to restructuring PG&E through the bankruptcy process, but says a state takeover is a possibility “if protecting Californians' interests and ensuring the necessary transformation requires further intervention.”

Youth Vaping

California could begin taxing the nicotine in e-cigarettes in an effort to combat what Newsom calls a youth vaping epidemic. Consumers would begin paying $2 for every 40 milligrams of nicotine in a product beginning Jan. 2021. 

E-cigarettes are currently taxed as tobacco products under state law. Revenues are anticipated to reach $32 million in 2021, which will go into a new fund for “administration, enforcement, youth prevention, and health care workforce programs.”

The budget also includes $7 million for California Highway Patrol and the California Department of Justice to combat the underground vaping market. The administration has voiced its support for a statewide ban on all flavored nicotine products beginning in Jan. 2021.

Mental Health, Addiction and Trauma

In the budget, the governor voiced support for making changes to the Mental Health Services Act, the 2004 millionaire’s tax that helps fund county-level behavioral health services. Currently, this funding can’t be used to provide treatment for substance use disorders. 

The administration noted in the budget summary that the act should be “updated to better focus on people with mental illness who are also experiencing homelessness, who are involved in the criminal justice system, and for early intervention for youth,” and that it will submit a proposal along these lines in the spring. 

Newsom is continuing to fund behavioral health services for children with “adverse childhood experiences”, including verbal and physical abuse, neglect or substance addiction. The budget includes $10 million for a training program through the Office of the Surgeon General and a statewide awareness campaign on this topic. 

Following multi-year efforts to combat the opioid epidemic, the new budget includes just over $89 million for the Medication Assisted Treatment Expansion Project, which helps reduce opioid overdose through the use of Naloxone. There is $426 million set aside for expanding substance use treatment in the Medi-Cal program. 

Environment

Additionally, the governor is reportedly preparing to announce a new loan program for groups with ideas to address climate change. According to CalMatters, the new program will offer low-interest loans to small businesses and organizations with plans to address climate change but who aren't able to receive venture capital funding.

Criminal Justice Reform

The Newsom administration is proposing allocating a total of $13.4 billion for the Department of Corrections and Rehabilitation. 

More than $24 million is set aside to treat Californians who are deemed “incompetent to stand trial” due to a mental illness or developmental disability. The funding would support the Community Care Collaborative Pilot Program, which will launch in three counties. There were roughly 800 Californians in that category in December 2019, all awaiting admission into the state hospital system. The estimated six-year cost of the program is just over $364 million.

Last year, Newsom moved the Division of Juvenile Justice out of the state corrections department and into health and human services. The new budget puts more than $289 million toward the transition, which takes effect July 2020. The funding could cover new positions, training and therapeutic services. 

In an effort to prevent inmate suicides, the corrections department could receive $3.8 million to retrofit 64 cells across the state to make them safer for inmates experiencing a mental health crisis. 

An additional $3.6 billion is allocated for mental health, medical and dental care. Nearly $6 million (increasing to $8.4 million by 2025) is set aside for telepsychiatry so that mentally ill inmates can receive counseling via video.

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