2022–2023 State Budget Update

California Government Update

California legislators have passed a 2022–23 spending proposal. This year’s budget measure, Senate Bill 154, totals over 1,000 pages.

The Senate voted 28 to 8 to send the budget to Governor Newsom. The final Assembly vote was 58 to 16.

Wednesday, June 15, marks the constitutional deadline for legislators to pass a balanced budget or go without pay and per diem. The legislature has not missed this deadline in more than a decade since California voters enacted these penalties, but budget passage is very likely not the finish line for adopting a final spending plan for the coming year.

The bill will now go to Governor Newsom for his consideration, and he will have 12 days from the time the bill reaches his desk to decide its fate. As in recent years, the actual negotiations between legislative leaders and the Governor will continue for the rest of the month as the legislature considers the numerous budget trailer bills.

Economic conditions have changed significantly since Governor Newsom unveiled his May Revision to the initial January spending proposal. The May Revision accounted for a historic $100 billion budget surplus. Disputes remain over how to allocate the surplus and there is a level of caution over committing the state to new ongoing funding proposals.

The Governor’s plan and the legislature’s budget blueprint differ in several significant ways:

  • Tax Relief and Cash Assistance—The Governor wants significant financial relief for California households linked to vehicle ownership; the legislature wants more targeted tax relief to households with under $250,000 distributed on a per-dependent basis. 
  • Climate Change—The Governor and the legislature disagree on the overall amount and allocation of funding for drought, energy reliability, zero-emission vehicles and wildfires.
  • Housing and Homelessness—The legislature wants more money for housing development and significantly more money to be spent at local government discretion.
  • K-14 and Higher Education—The legislature is proposing more money and more ongoing spending for local funding formula, for financial aid and student housing.
  • High-Speed Rail—The Governor wants continued spending for high-speed rail, but legislative leaders have expressed concern about whether regional transportation needs should be a higher priority.  
  • Money to Spend on Member Requests—The legislature is seeking to set aside some funding to respond to local priorities from individual legislators who want their districts to benefit directly from the huge surplus in revenues fueling this year’s spending plan. 

Additional negotiations between Governor Newsom and legislative leaders will continue on these issues as well as on important implementation details and will result in one or more bills amending the budget passed by both houses today before the new fiscal year starts on July 1.

Beyond that date, additional modifications and budget “trailer bills,” especially those dealing with climate change and the individual budget requests from state legislators, are very likely to continue to be worked on through the remainder of the legislative session, which ends on August 31.

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