On January 10, 2023, Governor Gavin Newsom released his proposed 2023-2024 State Budget that will fund state government for the 12-month period starting July 1, 2023.
State spending next fiscal year would be $297 billion as part of a balanced budget, with $223.6 billion in general fund spending. The Governor’s budget projects an estimated budget gap of $22.5 billion in the 2023-24 fiscal year.
The budget solutions to bridge the shortfall include funding delays, limited reductions and pullbacks, trigger reductions, and limited internal borrowing. The proposed solutions do not include tapping any funds from the $22.4 billion Rainy Day Fund. In his remarks, the Governor stated not touching the reserve accounts will provide flexibility as we will know more regarding the state of the economy in May as the proposed budget is updated. If economic and revenue conditions deteriorate in the spring, the Administration may propose withdrawals from reserve accounts, including the Rainy Day Fund.
Regarding state employee compensation, the Governor’s budget proposal summary states:
The Budget includes $487.5 million ($130.6 million General Fund) for increased employee compensation, health care costs for active state employees, and retiree health care prefunding contributions for active employees. Included in these costs are collectively bargained salary and benefit increases resulting from contract and side letter negotiations. Funding is also included for 2024 calendar year increases in health care and dental premiums and enrollment.
This employee compensation number is expected to increase significantly as 14 of the state’s 21 bargaining units will be in bargaining for new labor contracts. As those rank-and-file groups engage in bargaining, ACSS will continue the practice of making proposals to CalHR for related excluded employees.
Other proposed budget items of interest include:
- In addition to the $8.5 billion state employer contribution to CalPERS for state pension costs, a supplemental $1.2 billion one-time pay down of retirement liabilities at CalPERS
- An additional $390 million in one-time funding to prefund retiree healthcare
- Continuing government operations and efficiencies (5% operating costs from 2020 which have already been implemented) with office space reconfiguration and reductions, telework, and travel cost decreases.
As the proposed state budget progresses, ACSS will continue to meet with CalHR to advocate for supervisory and managerial employees.