Governor’s release of the May Revise is right around the corner

As required by law, Gov. Gavin Newsom is expected to release the May Revision to his January Budget Proposal in the coming days. May 14 is the required deadline, but if past years are an indication, the Governor is likely to announce sooner. The May Revise requires the state to present its budget revisions based upon personal income tax and other revenues it has received over the fiscal year.

After years of substantial economic growth and significant increases in ongoing and one-time revenues during the pandemic, this year’s May Revise will be much more somber. As opposed to last year, where the state’s delay in income tax filings resulted in a 2023–24 budget adopted using only projected estimates, this May Revise will effectively “true up” the prior and current fiscal years — uncharted territory for the state budget. When presented in January, the Governor regularly referred to the drop in revenues as the “normalization” of state income. However, although revenues are returning to a more stable growth projection, the state continues to operate with a substantial operational deficit. According to the non-partisan Legislative Analyst’s Office (LAO), the state is functioning under an approximate $30 billion operational deficit.

Last month, the Governor, Speaker of the Assembly Robert Rivas (D–Hollister) and Senate President Pro Tem Mike McGuire (D–Healdsburg) announced an agreement to take early action on the budget to lower the state’s projected deficit. This early action helped to reduce the budget by $17 billion through a number of actions on one-time monies, fund shifts, deferrals, withdrawals from the state general fund reserve and borrowing from the Managed Care Organization (MCO) provider tax.

Notably, however, the early action did not address the K-12 education side of the budget nor the Governor’s proposed Proposition 98 “funding maneuver.” CSBA has been advocating that the Legislature reject the Governor’s Proposition 98 proposal, which you can read about here.

Additionally, revenues from December through February did not meet projected estimates, which increases concerns that the state’s deficit will be larger than what was presented at the time of the Governor’s January Budget announcement.

What’s next?

Once the Governor announces the exact date of when he will release his May Revise, CSBA will host a webinar the following business day, in which Government Relations staff and other education finance experts will provide an in-depth look at the revised budget proposal.

CSBA is also co-sponsoring a series of Budget Perspectives Workshops in partnership with Capitol Advisors at county offices of education across the state from May 22-June 5. Register here.