California governor to reveal booming budget proposal

SACRAMENTO, Calif. (AP) — It was one year ago that a solemn Gov. Gavin Newsom walked onto a podium in California's capital city, removed his mask and announced he would raise taxes on businesses, slash spending on public education and cut the salaries of more than 233,000 state workers.

Newsom will return to that same podium on Friday, only this time he will have more than $100 billion of surplus cash to dole out in his revised budget, a motherlode that comes in a year when it's expected a recall election will allow voters to decide whether to fire him a year before his term ends.

California's budget bonanza is an apt reflection of the pandemic, an unpredictable roller coaster that often left officials in the nation's most populous state baffled about what was coming next.

The state's one-time surplus — nearly $76 billion, Newsom says — is largely because the governor and Democratic-controlled Legislature overreacted last year to a pandemic-induced economic downturn that was not nearly as severe as first feared.

The rest of the extra money comes from $27 billion in federal coronavirus aid.

While millions of low-wage earners lost their jobs and struggled to navigate the state's overwhelmed unemployment benefits system, most middle and, especially, high-income earners worked from home and kept paying taxes.

California relies heavily on the wealthiest taxpayers, who generally did well during the pandemic. That greatly boosted state revenues and provided a budget surplus.

Newsom has heralded the surplus, and the economy that underlies it, as a rebuke of recent criticism of the state's purported decline — a theme pushed in recent days by news of the state's first recorded population decline and loss of a congressional seat due to reapportionment.

Speaking at a virtual...