April Tax Showers Bring May Revenue for State Budget

California’s soaring economy is giving Gov. Gavin Newsom more revenue, money he proposes using to prepare for a future downturn, pay off some debt and address some of the state’s biggest challenges. The Governor on Thursday unveiled his “May Revise,” which reflects an increase of $4.5 billion over his January budget. About half that bump would be used to pay down debt and boost the state’s “Rainy Day” reserves, which the Bay Area Council has long supported. The remainder is sprinkled across a number of key areas, including education, housing and homelessness, among others.

We were excited to see an increase of $150 million to expand shelters and mental health services for the homeless, consistent with recommendations in a report the Bay Area Council Economic Institute released last month. The Governor’s May Revise message also alluded to the need for regional solutions on homelessness, which he discussed with us during his campaign last year and which was the key tenet of the Economic Institute report. Funding for housing was largely unchanged, with some tweaks that align with the Council’s advocacy to speed construction of more lower- and middle-income housing, particularly infill housing near transit and jobs. Gov. Newsom also proposed increasing funding to expand paid family leave by two weeks for state workers. The Council will be closely engaged in the coming budget discussions.