California Budget: Recovery, Recall and Record Revenue Drive Newsom Plan

All but about $38 billion of that revenue, by law, must go to public schools, various budget reserves and other obligations. Some, too, must be rebated to taxpayers by mid-2023. The governor’s proposal included some $11 billion to pay down the state’s long-term liability for public employee pensions. And he took some heat from an independent state analyst on Monday for holding onto about $8 billion he had pulled from cash reserves last year, instead of repaying it.

Still, the situation is a far cry from 2003, when the dot-com bust and tight state budgets fueled the recall of Gov. Gray Davis, said Rob Stutzman, a Republican political consultant.

“Politicians rarely lose when they’re handing out money,” Stutzman said. “And the state is just flush with cash.”

It also may reflect a new resolve about government spending.

Raphael Sonenshein, the executive director of the Pat Brown Institute for Public Affairs at California State University, Los Angeles, regards Newsom’s proposal as part of a new embrace of government largess in the Democratic Party. Gone, he said, is the split-the-difference frugality of, say, Gov. Jerry Brown.

“Partly it’s the country coming out of the pandemic, and partly it’s what is coming out of Washington, D.C.,” he said. “But states — and not just California — are in a position not to just repair but to even reverse the decline in the social safety net. And that’s a big deal.”

President Biden’s New Deal-inspired plans to help the nation recover from the pandemic have paved the way for sweeping state-level proposals such as Newsom’s, Sonenshein said. So has the sense among financial experts that government could and should have intervened more aggressively to head off the Great Recession in 2008.

“I think the hold of austerity politics has been so strong for so long that people didn’t question a lot of the orthodoxy. But that has changed,” he said.