Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Michael P. Callagy, County Executive
Connie Juarez-Diroll, Chief Legislative Officer
Subject: Analysis of the Governor's FY 2023-24 State Budget Proposal
RECOMMENDATION:
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Accept this informational analysis of the Governor's FY 2023-24 State Budget Proposal.
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BACKGROUND:
On January 10, 2023, Governor Newsom released his initial budget for the 2023-24 fiscal year, a $297 billion ($224 billion General Fund (GF)) spending plan. The Governor's Budget forecasts that GF revenues will be $29.5 billion lower than projections, and California will be facing an estimated budget gap of $22.5 billion in the 2023-24 fiscal year. To close the budget gap, Governor Newsom proposes a combination of funding delays, reductions and pullbacks, budget shifts, trigger reductions, and limited revenue generation and borrowing to address the problem. The Governor has not proposed tapping into the state's reserve accounts.
Compared to the 2022 Budget Act, there is a $1 billion increase in budgetary reserves ($34.6 billion for 2022-23), with $22.4 billion reserved for the Rainy Day Fund (up $1.5 billion from last year). Few new programs and funding commitments are proposed, in stark contrast to the Governor's previous annual budgets.
The Governor's Budget projects that California's economy will grow modestly in 2023 as interest rates remain high. Additionally, the Governor's Budget forecasts that nonfarm job and wage growth will slow in 2023 and eventually align more closely with normalized growth rates. While the Governor's Budget is cautiously optimistic, there is significant uncertainty, given the geopolitical issues and potential for inflation to persist longer than expected, which could cause a mild recession.
The Governor's Budget includes investments in the following areas of focus of interest to the County:
Homelessness. The proposed budget mainta...
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