Gov. Newsom’s budget banks on rosy projections, continuing a legacy of reckless spending | Opinion

On Friday, Gov. Gavin Newsom presented his revised budget. I was hopeful he would have been detailed, prudent and honest with his approach to the deficit. But what became clear from the presentation was that Newsom is in denial, embracing overly optimistic numbers.

I am concerned that the governor’s budget banks on rosy revenue projections and continues a legacy of reckless spending that began during the Democrats’ decade-long control of the budget process. One-party rule has fed unsustainable spending, and California is on a path of deficit spending for years to come.

In fact, the reckless spending is how a staggering $98 billion surplus in 2022 turned into an equally staggering $73 billion deficit, according to a nonpartisan estimate, in just two years.

Opinion

In May of 2022, Newsom proudly proclaimed the $98 billion surplus for the upcoming budget year — a surplus fueled in large part by federal pandemic spending and a Silicon Valley stock market boom. Both were short-term factors. We were not living in some new budget normal, but the governor and Democratic legislators chose to spend as though the good times would never end.

In January of 2023, Newsom introduced his proposed budget for the upcoming year: A nearly $22 billion deficit loomed. Steps to curb spending should have been implemented immediately, but they were not.

By May of 2023, the deficit had ballooned to an estimated $32 billion, and the forecast from the governor’s finance department indicated a deficit of at least $15 billion for each of the following three years.

Instead of addressing the deficit by bringing spending in line with revenues, Newsom and Democratic legislators leaned into borrowing, fund shifts and other gimmicks to paper over the deficit for the year.

By early last December, after analyzing tax data following the November tax-filing deadline, the Legislative Analyst’s Office (LAO) projected a $68 billion deficit. By this past February, based on tax receipts through January, the LAO upped its deficit forecast to $73 billion — and that’s about where we stand now, despite the governor’s claims that the deficit is smaller.

In the past, California’s budgetary process was more inclusive. Without a supermajority of Democrats in control, decisions required broader consensus, necessitating a conference committee where diverse voices could contribute to the fiscal dialogue. This system fostered negotiations and compromises, ensuring consideration of a wide array of perspectives in the budget-making process. It was transparent.

Now, it’s just the governor and Democratic leadership making all the decisions, mostly behind closed doors.

The governor claims he is fiscally prudent, but that’s not really the case. He continues to spend recklessly on costly programs that have made the fiscal hole much worse.

As an example of gimmicks to minimize the budget problem, the governor is claiming $1.6 billion in budget savings by shifting the payroll due on the last day of this fiscal year to the first day of the next. That’s purely accounting sleight-of-hand. Postponing the payment by 24 hours merely creates an illusion of savings. Not one dollar is saved, and next year’s deficit is now worse.

The takeaways from all this? One-party rule is drowning this state in debt. Borrowing from future revenues, shifting funds from other accounts and deploying accounting gimmickry are shortsighted tactics and ignore the root cause of the deficit: unsustainable spending. The need for transparency in the budget-making process has never been greater.

By the way, the governor dropped his budget update on a Friday, days before he jetted off to Italy. That says a lot right there.

It shouldn’t be this way. It’s time for California to embrace genuine fiscal solutions, heed expert advice and move beyond the mirage of temporary fixes.

Sen. Roger Niello represents the 6th district, which includes portions of Sacramento and Placer counties.