Our View Of Governor’s Proposed 2022-23 Budget

Earlier this week DOF released the Governor’s Proposed Budget for the fiscal year starting July 1. At 400 pages it takes time, a process we have now completed. Some initial thoughts follow:

There’s a good deal to like, including:

  • A proposal to extend preventative Medi-Cal coverage to all income-eligible residents that would make CA a multi-payer universal coverage system not unlike many European systems we admire;
  • Multiple cautions that revenue estimates are unreliable because state tax revenues are so dependent on unpredictable stock markets;
  • A commitment to addressing the State Appropriations Limit that impedes the ability to reserve more money and a stark reminder that much greater reserves are required;
  • Acknowledgement that with an unemployment rate that’s >60% above the national rate, jobs in California are recovering too slowly.

There’s also a good amount to dislike, including:

  • Few facts about performance (eg, in what ways did increased spending on K-12 help pupils?) or returns from investments (eg, what was the outcome of the $536mm early action package before the 2021 fire season?);
  • Dozens of new investment proposals without divulging how previous investments performed (a search of the text for “investment” yields more than 300 entries while “performance” yields just 6 entries);
  • Current year salaries for Corrections employees that are 33% higher than forecast in the 2021-22 budget and no proposal to access federal funds when subsidizing health insurance for retired state employees;
  • No proposals to alter protectionist code provisions contributing to unemployment or to treat K-12 more like Medicare to allow disappointed parents more provider options.

GFC will have more to say on these and other subjects.