To get the money, lawmakers would entice
taxpayers to pay their future taxes early in
exchange for a discount. It’s a tradeoff for the
state. Lawmakers would get the money up front,
which they could start spending sooner to help
the economy recover. But beginning in 2024,
state revenues would be $3 billion less each year
for the next 10 years.
Legislative leaders believe the economic crisis
will have passed and the state’s normal annual
operating budget of more than $200 billion
could easily absorb the losses.
“The ultimate effect of course would enable
taxpayers to invest in California to help California
struggling through this very challenging crisis,”
Democratic Sen. Bob Hertzberg said.
Last week, Gov. Gavin Newsom projected the
state’s unemployment rate would hit 18%,
or 46% higher than the height of the Great
Recession a decade ago. With so many people
out of work, state tax collections have dropped
so much that Newsom is now projecting a
budget deficit of $54.3 billion.
Senate President Pro Tempore Toni Atkins
vowed the chamber would avoid major
ongoing program cuts or broad middle class
tax increases, saying those options work in the
short-term but “actually cause more economic
damage and prolong our budget struggles.”
Senate Budget Committee Chair Holly Mitchell,
a Democrat from Los Angeles, said lawmakers
have identified savings of nearly $95 billion over
the next two years. About $41 billion would
come from the state’s reserves and other budget
maneuvers that include internal borrowing and
shifting some costs to future years.