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California lawmakers unveil a budget that rejects Gavin Newsom’s budget cuts. Here’s their plan

California lawmakers on Wednesday announced a joint budget plan that would restore some funding for homelessness and social safety net programs while making cuts to the state’s prisons.

The spending proposal from Assembly Speaker Robert Rivas, D-Hollister, and Senate President Pro Tem Mike McGuire, D-Healdsburg, would address the state’s estimated $45 billion budget deficit, but differs in key ways from the proposal Gov. Gavin Newsom previously presented . in the month.

Many of the changes echo concerns lawmakers have raised about cuts to housing and homelessness initiatives, subsidized child care and social safety net programs that Newsom included in his revised spending plan.

The Legislature must pass a budget by June 15 for lawmakers to receive their salaries. That budget could serve as a placeholder while leaders continue to negotiate with Newsom. The governor must sign the budget bill by June 27, Assembly budget adviser Jason Sisney said in a Substack post Thursday. The new financial year starts on July 1.

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Rivas said in a statement that the legislative plan “restores funding to build more homes, supports K-12 classrooms, and rejects many of the cuts that impact our most vulnerable residents.”

The legislative budget would provide $1 billion for a new round of grants for the Homeless Housing, Assistance and Prevention program. Newsom’s budget proposed cutting $260 million in additional funding for the latest round of the program and did not include money for future grants. Lawmakers also want to reject the governor’s proposed cuts to programs that help finance local housing planning and multifamily rentals for low-income residents.

Lawmakers are pushing to restore funding for some subsidized child care spaces after Newsom’s revised budget froze an expansion of the program indefinitely. They also reject some of the governor’s cuts to CalWORKs — the state’s welfare program — and foster care initiatives, in addition to returning millions in public health dollars that Newsom’s revised budget eliminated.

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The governor’s spending plan would have eliminated billions in rate increases for Medi-Cal providers that would result from a tax increase for managed care organizations that would help the state bring in additional federal dollars. Lawmakers instead want to keep some of the new investments and delay them from January 1, 2025 to January 1, 2026.

As progressive Democrats have suggested, the legislation would cut more funding from the state Department of Corrections and Rehabilitation. The Senate version of the joint legislative plan says lawmakers are proposing $1 billion in CDCR cuts. The General Assembly’s version says this includes “substantial new cuts” and includes the governor’s plan to save more than $80 million by decommissioning unused prison beds.

The bill retains some elements of Newsom’s budget. It adopts a plan to suspend the tax deduction on net business losses for companies making more than $1 million in California and limit corporate tax credits for three years. But lawmakers would begin the suspension and cap in 2024, rather than 2025. The Legislature also supports the governor’s plan to cut state operations budgets and vacant positions.

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Newsom recently reached an agreement with the powerful California Teachers Association on education funding that would provide schools with more money in the future, as Politico first reported. Lawmakers have not yet endorsed that agreement, with both the Senate and Assembly versions of the budget agreement stating that the Legislature “continues to examine the new proposal.”

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