California to spend big on education, healthcare in $144 billion budget

US

FILE PHOTO: Gubernatorial candidate Gavin Newsom speaks to the media after an event with Democratic congressional candidate Katie Porter, Senator Kamala Harris and comedian Chelsea Handler in Irvine, California, U.S. November 3, 2018. REUTERS/Patrick T. Fallon/File Photo

SACRAMENTO, Calif. (Reuters) – California Governor Gavin Newsom capped a busy first week in office on Thursday by proposing $144.2 billion in general fund spending for the most populous U.S. state, including increased expenditures in healthcare and education.

Newsom’s fiscal blueprint assumes continued economic growth but cautions that a recession could transform an existing budget surplus of more than $25 billion left by his predecessor, Jerry Brown, into a $40 billion deficit over three years.

With additional bond revenue and “special fund” allocations of $64.8 billion, total state spending proposed by Newsom for the upcoming fiscal year that begins in July would come to $209 billion.

The blueprint also includes $13.6 billion Newsom has proposed setting aside for what he called “budget resiliency,” with those funds earmarked to pay for the state’s unfunded retirement liability, to build on the its rainy-day cash reserve and to pay down California’s debt.

The general fund would include a record $80.7 billion in spending for public school education from kindergarten through 12th grade, which Newsom said would rank as the largest such expenditure in state history. That tally amounts to an increase of $5,000 per student compared with spending levels seven years ago, the budget said.

Other highlights were $750 million to expand full-day kindergarten, $402 million for community colleges, including money to provide a second year of tuition-free education, and $1 billion to expand the state’s earned income tax credit for working families.

The budget also calls for an overall increase in health and human services spending of 8 percent over the current fiscal year.

Reporting by Sharon Bernstein in Sacramento, California; Editing by Steve Gorman and Lisa Shumaker

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