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Governor Gavin Newsom is expected to present his 2020-2021 State Budget proposal on Friday, January 10 with California heading into the new year in a favorable position fiscally. It is estimated that at the end of 2020-21, the state’s discretionary reserve balance will reach nearly $7 billion – money above what the state will need to cover existing commitments and legal obligations.

Experts at the Legislative Analyst’s Office caution that California’s fiscal outlook is particularly threatened by a severe or longer-lasting recession, and is built on a number of specific assumptions that also pose significant risks. The Legislative Analyst’s Office recommends “a cautious approach to increasing the state’s ongoing commitments.”

Previewing the state’s goals in the upcoming budget year, Chair of the Assembly Budget Committee Assembly Member Phil Ting (D-San Francisco) released the Blueprint for a Responsible Budget, unveiling broad highlights of the anticipated 2020-21 state budget. Of particular interest to special districts are budget priorities referring to the oversight of the Safe and Affordable Drinking Water program(s) and the state's efforts to address natural disasters (e.g., wildfires) and emergency power disruptions.

Of note to special districts, the previous budget package, signed back in June 2019:

• Made an extra payment of $9 billion over the next four years to pay down unfunded pension liabilities, including $3 billion to CalPERS and $2.9 billion to CalSTRS on behalf of the state, and $3.15 billion to CalSTRS and CalPERS on behalf of schools;

• Included $225.8 million to implement forest health and wildfire prevention efforts, plus $31.3 million from the General Fund to backfill wildfire-related property tax revenue loss for cities, counties, and special districts as well as funding to waive the local share of debris removal costs;

• Initiated the Safe and Affordable Drinking Water Fund program one year earlier than previously planned by investing $100 million Greenhouse Gas Reduction Funds (GGRF) and $30 million from the General Fund in 2019-20, with $130 million continuously appropriated on an ongoing basis until 2030;

• Began collection of a mandatory filing fee for agencies filing/maintaining Section 218 Agreements with CalPERS; and

• Expanded the maximum duration of a Paid Family Leave benefit claim from six weeks to eight weeks for all bonding and care-giving claims, starting July 1, 2020.

For those interested in a full review of the Governor’s previous budget package signed in June 2019, a release from Newsom’s office about the proposal can be viewed here.

CSDA will continue to monitor the 2020-2021 State Budget process and keep members informed of developments.