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Newsom announces record California budget surplus of $97.5 billion

Newsom details plans for unprecedented budget surplus
Newsom details plans for unprecedented budget surplus 02:38

SACRAMENTO — California is entering the next budget year with a record-smashing surplus of nearly $100 billion, Gov. Gavin Newsom said Friday.

Newsom unveiled a revised budget plan of just over $300 billion for the next fiscal year, the highest in state history and fueled by surging tax revenues. The state has collected $55 billion more in taxes than officials expected in January, leaving it with an estimated $97.5 billion surplus.

That means Newsom, a Democrat, has tens of billions of dollars more to spend on new and existing initiatives as he seeks re-election in the fall. He plans additional spending to tackle the ongoing drought, to help more women get abortions in California and to offset rising costs of food, gas and other goods due to inflation.

California Gov. Gavin Newsom unveils his 2022-2023 state budget revision during a news conference in Sacramento, Friday, May 13, 2022. AP Photo/Rich Pedroncelli

He'll have to reach agreement with the Democratic-led legislature on all of his proposals. They have until the end of June to finalize the budget, which takes effect July 1.

Newsom said one of his top budget priorities is providing Californians relief from inflation.

"People are feeling deep stress, deep anxiety," he said.

He's proposed giving $400 checks to registered car owners in the state, with up to two checks per person. That would cost the state about $11.5 billion, he said. Though the money would only go to car owners, Newsom said it should be considered "inflation refund and relief."

"For you, it could be a rebate to address the issue of groceries, it could be a rebate to address the other cost burdens that are placed on you," he said.

Democratic lawmakers, though, have a different idea on how to provide relief. They want to give $200 checks only to those below a certain income level.

Republicans, meanwhile, say rather than a check Newsom should suspend the state's highest-in-the nation gas tax for one year. They've also asked him to increase a tax credit for renters and offer new tax credits to students.

"Senate Republicans believe there is a better way to invest in the state," said Sen. Rosilicie Ochoa Bogh of Yucaipa.

Some people in the Bay Area tell KPIX 5 they think the relief will be much needed for some people.

"Hopefully we can get some money. I guess that would help some people out that need it," said San Mateo resident Greg Bryant.

But others said they don't think it will actually solve the problems everyone is dealing with.

"Putting more money in people's pockets is going to make the problem worse, because you've got more money, people trying to buy more stuff, and the prices are still going to go up. You've got to deal with the supply issues," said Millbrae resident Ramiro Cruz. "These are all temporary measures. You have to deal with the supply issues. Once you deal with that, the prices will start coming down again."

Kai Ding, a professor of economics at Cal State University East Bay, thinks the relief package will help ease the burden of inflation and high gas prices for many families, especially lower-income families.

"I think a lot of this relief package makes sense, because it's lower income families who are spending a bigger portion of their money on rent, gas, groceries, and transit," Ding said. "It's definitely going to alleviate the pain for a lot of people."

However, Ding thinks the relief package is more of a temporary fix to a bigger issue and won't eliminate the problem itself.

"Giving out money won't solve the inflation problem," Ding said. "To address inflation, we really have to fix the oil problem and the supply chain problem."

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