Gavin Newsom’s first speech as governor Monday was what you might expect: unabashedly progressive, upbeat and carefully crafted to send distinct messages to everyday Californians, state lawmakers and the Trump administration. With few specifics, he declared that it was a “moral imperative” to address stagnant wages, inequalities in wealth and opportunity, homelessness, the school achievement gap, poverty and hunger — and he said the Golden State is up to the challenge of addressing each issue — in the process offering “an alternative to the corruption and incompetence in the White House.”
But after the speech and days of leaks about two big initiatives, Newsom announced a third big proposal that will be part of his administration’s 2019-20 budget that must be submitted to the Legislature by Thursday. For all his tributes to predecessor Jerry Brown’s fiscal stewardship, it’s plain that Newsom is ready to go places Brown wouldn’t.
Newsom’s latest plan is a major expansion of Medi-Cal that would provide substantial subsidies to middle-class families for coverage — allowing families of four with income less than $150,600 to qualify. To shore up the health-care system’s finances, Newsom wants to require that individuals in the state maintain health insurance. He also wants to provide Medi-Cal to unauthorized immigrants up to age 26; they now lose coverage at 19.
Newsom’s office said he would seek waivers from Congress to allow California to go its own way on health care — and, presumably, to allow California to directly access the federal health-care funds that are now spent on its residents. This is sure to be an extremely contentious if not futile process. It’s hard to imagine congressional Republicans agreeing to what they inevitably will see as funding California’s experiment with socialized medicine.
Newsom also plans to propose a $1.8 billion program intended to help children from poor families be ready for kindergarten, reflecting studies that show a lack of early childhood education can haunt kids for life. It would expand pre-kindergarten education and provide funding to the districts that don’t have facilities to offer full-day kindergarten.
Nearly $750 million of spending would go to expand subsidized child-care programs. About $200 million would be used for in-home visits to help expectant and new parents with health information and their children with health screenings.
This program could be great for California’s millions of struggling families. But it must be executed with an emphasis on metrics and best practices — unlike the state’s K-12 system. A 2013 report by the Brookings Institution found that many “preschool for all” initiatives showed mixed or conflicting results. A 2018 analysis by the National Institute for Early Education Research was much more positive. But both studies emphasized the need for constant, rigorous evaluation of what works and what doesn’t.
Newsom’s third major initiative is no less ambitious but far less specific. He wants to offer families six months of paid leave after a child’s birth, which would be the most generous program of any state. California now provides for six weeks of partly paid leave in a program funded by employee payroll taxes. Newsom is proposing gradual growth, but how this expansion would be funded is unclear.
Given that the state is on track to have a budget surplus and a rainy-day fund that are both greater than $14 billion, California progressives may see an opportunity with little risk. But California is overdue for a recession, as Brown often warned. When the Great Recession hit a decade ago, state revenue plunged $20 billion in a single year, forcing harsh cuts in social programs and education. State budget analysts say if another recession hits — even if it is less severe — the state could face $60 billion in lost revenues over three years, eviscerating both the rainy-day fund and the surplus. And that doesn’t factor in the fiscal headaches ahead because of underfunded state government pension systems.
Newsom knows the risks of government expansion in a state dependent on volatile revenue streams. Yet he is forging ahead with a bold agenda from day one. With Democrats firmly in control in Sacramento, any coming policy fights may be tame. But when a recession hits, you can expect the fight over how to pay for Newsom’s agenda to be fierce.
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