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Gov. Newsom May Revision Proposal 2019-20

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GOV. NEWSOM RELEASES HIS MAY REVISION TO THE JANUARY BUDGET PROPOSAL FOR 2019-20 FISCAL YEAR For questions or comments, contact Martha Alvarez, ACSA Legislative Advocate, at Today, Gov. Gavin Newsom released the May Revision to the 2019-20 State Budget. Just like recent reports indicated the state's revenues were above projections by several billion dollars, the May Revision reflects higher revenue estimates of $3.2 billion through 2019-20 compared to the January budget, with most of these increases going towards constitutionally required reserves, debt repayment and schools, while demonstrating a commitment to the causes championed during the gubernatorial campaign. At the news conference, he framed his proposed budget as one that prepares for uncertain economic times, while paying down debts and also making major investments on issues that had not been prioritized before. Consequently, Gov. Newsom's budget seeks to achieve a balance between meeting some of the state's priorities with limited ongoing resources, while recognizing the volatility of the state's predominant revenue stream. This "boom and bust" trend in the state's revenues prompted the passage of Proposition 2 by California voters in November 2014 to set aside money in the state's reserve. By the end of 2020-21, the state could have $16.5 billion in the constitutional Rainy Day Fund, which are reserves available for future budget emergencies and could allow the state to reach its constitutional target of 10 percent of General Fund revenues two years ahead of schedule. It is projected that the Rainy Day Fund balance will be $18.7 billion by 2022-23. It is important to note the state's economy is five years past the traditional recovery period following an economic recession and warns of the uncertainty created by the national political landscape and the recent changes to reduce federal taxes. The May Revision economic forecast recognizes slower growth in the economy. Without predicting when the next recession could occur, the administration continues to emphasize the importance of preparing for the next downturn that could result in close to $70 billion in reduced funding and approximately $40 billion in budget deficits over three years.

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