Info Alert: Breaking Down the Budget

Posted February 3rd, 2021 | Status:

Gov. Gavin Newsom released his draft budget last Friday. It presented a stark contrast from what was projected last year, when Newsom predicted a massive shortfall.

We will take a closer look at the proposal at next week’s board meeting, but for now here are the highlights.

Click here to see the budget in full.


This $227-billion budget would be the most expensive in state history, projecting a $15-billion surplus. As reported by the Associated Press, state officials are crediting the turnaround largely to “Californians earning a record $185 billion in capital gains income… resulting in $18.5 billion in tax revenue for the state.”

Economic Recovery:

The governor is calling for approximately $1 billion for economic recovery: $750 million would go toward job creation through a mix of tax credits, microgrants and loans, while another $353 million would provide job training and apprenticeship programs in select industries.

According to The Sacramento Bee, economic recovery funding would be in addition to the $575 million in grants the governor is asking the Legislature to approve to go to small businesses to help them through the pandemic.

Perhaps the most noteworthy item is the Golden State Stimulus plan, which allocates $2.4 billion to provide $600 refunds to low-income workers who qualify.


The governor had already introduced a $2 billion plan to incentivize schools to resume in-person learning. The budget also calls for $4.6 billion for supplemental learning to provide academic support in the wake of school closures.


The budget calls for $372 million to speed up vaccination efforts.


The budget calls for state funding for $500 million infill infrastructure grants and $500 million for low-income housing tax credits. The budget devotes $2.6 billion in federal funding for low-income rental assistance.


The budget calls for a one-time commitment of $1.75 billion to purchase additional motels, short-term community mental health facilities and senior housing in support of homelessness.

Climate Change:

The budget calls for $1 billion in support of zero-emission vehicle infrastructure and $1 billion to support “forest health and fire prevention,” according to legislative Democrat analysis.


The budget is expected to push the state’s reserves to nearly $22 billion.

Future Deficits:

Despite the dramatic turnaround in this budget, the governor is projecting budget deficits in subsequent years as spending growth will be exceeding revenue.

Gann Limit:

The budget projects to trigger the Gann limit — limits on the growth of government spending — which could result in a tax refund of approximately $1.27 per person.

Further Reading:

The Orange County Register: California budget — from boom to bust and back to boom

Associated Press: California governor’s budget booms despite pandemic problems

The Sacramento Bee: Newsom’s budget offers tax breaks to businesses, job training to spur California economy

Keeping you informed,

BizFed Founding CEO


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