California lawmakers send Gavin Newsom budget flush with surplus, $600 stimulus checks

California lawmakers on Monday passed a 2021 state budget that reflects a partial deal with Gov. Gavin Newsom on most key issues, including $8 billion in stimulus checks for middle-income Californians and expanded funding for homeless aid.

Newsom and lawmakers have not yet announced a final deal on all aspects of the spending plan, but lawmakers say they’ve reached agreement on most areas, including on expanding health coverage to more undocumented immigrants.

Lawmakers and Newsom will continue to negotiate some details of the $262.6 billion budget, such as some provisions related to child care, but the partial deal indicates that the governor and Legislature have agreed to an overall framework.

The record-breaking budget has a massive surplus of about $80 billion, Newsom said Friday, allowing him and lawmakers to dramatically increase spending on the state’s social safety net and add a new grade to California public schools called transitional kindergarten.

“This truly is a historic budget,” said Assemblyman Phil Ting, D-San Francisco, noting the dramatic turnaround from last year when they faced a projected $54 billion deficit. “Not only did we not see revenue go down, we actually saw revenue go up — revenue we sorely need to help so many working California, to help so many struggling Californians.”

The state has so much money to spend because California’s tax structure relies heavily on the state’s top earners, who tended to do well during the coronavirus pandemic while low-income people bore the brunt of the economic hardship.

The budget deal reached so far steers billions in aid to those low- and middle-income Californians who Newsom and lawmakers say need help recovering as the state emerges from devastation wrought by COVID-19.

“I rise today with a great sense of optimism,” said Senate President Pro Tem Toni Atkins, D-San Diego. “This budget is a once in a generation opportunity to make transformational change, a chance to not only check boxes, but to change lives.”

During a committee hearing on the budget Monday morning, Sen. Jim Nielsen, R-Red Bluff, criticized the deal for being incomplete.

“What we’re voting on is not really the budget, it’s a budget in process,” he said. “I object to that.”

He and other Republicans who spoke during Monday budget hearings complained that they did not have enough input into the deal, and argued it doesn’t pay down unemployment debt or spend enough on fire prevention. Democrats control both chambers of the Legislature and had more than enough votes to pass the budget through both houses without Republican support.

”I’m afraid that this budget is not adequately tackling critical and fundamental needs that every California expects us to tackle,” said Assemblyman Vince Fong, R-Bakersfield.

Stimulus checks, small business grants

The partial budget deal includes $1.5 billion in grants of up to $25,000 for small businesses that have struggled during the pandemic.

It also will send $600 stimulus checks to Californians making less than $75,000. When Newsom proposed the checks in May, he made the announcement alongside top legislative Democrats, a signal that part of his budget plan had broad support.

Other aspects of the budget required more negotiation, including a proposal to expand state-funded health care for undocumented immigrants. Lawmakers succeeded in convincing Newsom to expand eligibility for the state’s Medi-Cal program to undocumented people over age 50. Newsom had originally proposed expanding the program for undocumented people over 60.

Ting said Monday that lawmakers and Newsom are still working to finalize the part of the budget related to child care, even after a child care providers union on Friday announced a new contract with the state that resolves a major sticking point in budget negotiations.

Democratic leaders had sided with the providers in urging the Newsom administration to approve pay rate increases for child care workers, which the union argues are necessary to stave off daycare closures. The providers’ new contract agreement with the state includes “significant rate increases,” the union announced Friday.

Lawmakers and Newsom have also agreed to add 200,000 additional subsidized daycare slots over two years, according to the summary document.

More funding for homeless efforts

Lawmakers also agreed to spend $12 billion on new homeless aid efforts over the next two years, including adding funding to the governor’s signature housing program, Project Homekey.

Democratic lawmakers did not succeed in convincing Newsom to add permanent spending on local public health departments in the 2021-22 budget year, but they secured an agreement to add $300 million in ongoing public health funding starting the following year, according to the summary document. Public health officials had pushed Newsom to include $200 million in ongoing funding starting in the 2021-22 budget year, while lawmakers proposed doubling that amount to $400 million.

Other budget bills lawmakers passed Monday include a measure that could speed up the timing of the Newsom recall election, and another to increase fees for large businesses to fund toxic substance cleanup.

Lawmakers also passed the bill authorizing the stimulus payments for Californians making between $30,000 and $75,000.

It builds on legislation passed earlier this year that approved similar payments for low-income people making less than $30,000. It also would send $500 to families with children, and $1,000 to undocumented families with children. Those families were largely left out of federal stimulus payments.

This story was originally published June 28, 2021 at 5:00 AM with the headline "California lawmakers send Gavin Newsom budget flush with surplus, $600 stimulus checks."