Proposed Budget - Fiscal Year 2023
On January 10, California Governor Gavin Newsom introduced his budget proposal for fiscal 2023. The budget calls for total state expenditures (excluding federal funds) of $286.4 billion, including $213.1 billion in general fund spending for fiscal 2023. This represents a 1.5 percent general fund increase compared to spending levels in fiscal 2022. The budget is based on total general fund resources for fiscal 2023 of $219.4 billion, including a $23.7 billion beginning balance and $195.7 billion in annual revenue after a $1.6 billion transfer to the rainy day fund. General fund revenues, prior to transfers, are forecasted to decline 2.2 percent in fiscal 2023 compared to fiscal 2022. The recommended budget projects reserve balances of $20.9 billion in the Budget Stabilization Account/Rainy Day Fund (BSA), $9.7 billion in the Public School System Stabilization Account (PSSSA), and $900 million in the Safety Net Reserve. Additionally, the general fund ending balance is expected to be $6.2 billion, including a $3.2 billion Reserve for Liquidation of Encumbrances and $3.1 billion in the Special Fund for Economic Uncertainties (SFEU). This amounts to combined budgetary reserves (BSA, PSSA, SFEU and Safety Net) of $34.6 billion (16.2 percent of recommended general fund expenditures for fiscal 2023), and a total balance of $37.8 billion. The governor also recommends some changes to allocations of Coronavirus State Fiscal Recovery Funds (CSFRF) from the American Rescue Plan Act (ARPA), namely increasing the allocation for revenue replacement by roughly $2 billion and shifting the cost of certain programs supported by CSFRF to the general fund, to increase funding flexibility and streamline reporting requirements.