California’s higher than anticipated tax revenue is going to help in this year’s financial recovery, but beyond the 2021 budget, the state will still have the same issues to face before the pandemic began.
“In the broadest sense, there is no part of the budget that was probably untouched by Covid to some extent or another,” Matthew Record, assistant professor of public administration at San Jose State University, told the Northern California Record.
“But it's not at all clear as to how structural this surplus is – in other words, it looks like a possibly one-time windfall rather than something that we can rely on structurally moving forward, especially since the surplus appears to be primarily the result of benefits that have accrued to the wealthiest Californians, and that's not a really reliable way of building a tax base.”
It likely means the state will be able to roll back some spending cuts and pay freezes, but the windfall is not expected to extend beyond this year.
“Moving forward, this might point to the extent to which California is sort of dancing on the knife's edge and this sunny circumstance could turn very cloudy very quickly,” Record said.
The $90 billion allocated for schools will help prepare facilities to bring back young students for in-person learning in the spring.
While the budget does set aside some money for expansion of community college and higher education offerings, it does not appear to address financial aid for post-secondary students experiencing homelessness, as addressed in SB 291, Record said.
“A lot of this is just kind of us playing catch up, rather than trying to fix structural problems that existed a year ago,” Record said. “We're mostly just trying to undo the problems that have crept up in the last 10 months.”
Yet the amount allocated for COVID-19 vaccination efforts is far less compared to other initiatives, Lawrence McQuillan, director of the Center on Entrepreneurial Innovation at the Independent Institute in Oakland, told the Record.
“So much is business as usual, which is a little disappointing, when you consider the entire size of the budget – $227 billion – the amount on COVID-19 vaccination efforts seems small potatoes in terms of the overall impact of the lockdowns and people being out of work,” McQuillan said.
The budget includes $372 million to speed up vaccine efforts across the state, according to a news release from Gov. Gavin Newsom’s office.
“It’s also expanding current programs that have nothing to do with Covid, like $1.5 billion for clean cars,” McQuillan said. “That should be at the very bottom compared to what’s necessary to get the economy running, to get people back on their feet, and get schools back open.”
California has lagged behind other states in terms of efficacy of vaccine delivery, the Sacramento Bee reported.
“In my mind, it’s all about vaccinations and testing, and the more money that can be put in that right now, the faster California will be able to open up its economy,” McQuillan said.
Record stressed that post-pandemic recovery will be K-shaped, but to an even more extreme degree compared to other recessions, given the depth of financial setbacks that low- and middle-income residents have experienced.
“We may have created a situation where any progress that was being made on California structural issues may have completely stalled,” Record said.