New budget proposal tackles homelessness in California

SACRAMENTO, Calif. (AP) — Calling it "a stain on the state of California," Gov. Gavin Newsom on Thursday vowed to use part of a historic budget surplus to tackle homelessness in the nation's most prosperous state.

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"This homeless issue is out of control," Newsom told reporters on as he unveiled his revised state budget. "(People) are outraged by it, they are disgusted by it, they are wondering what the hell is going on in Sacramento, and they should."

Newsom outlined a proposed $1 billion in spending to combat the problem as part of his $213.5 billion state spending plan, an increase of $4.5 billion from his first plan in January.

His proposal included a massive state surplus of $21.5 billion, most of which he used to pad state reserves and pay down debt as he warned of a coming recession. That still left him billions more to invest in homelessness as well as teacher training, health care for young immigrants living in the country illegally and a tax credit for working families.

While homelessness in America has declined by 13 percent since 2010, it has jumped by 9 percent in California during the same time period, driven in part by a lack of housing and soaring rental and home costs.

Newsom's spending plan gives $650 million to local governments to build shelters, offer rental assistance and convert hotels and motels to temporary or permanent housing. The state's 13 largest cities would get $275 million, and the counties would get $275 million. The rest would go to community organizations.

"Being on the streets, living in cars and other uninhabitable places is not acceptable. We need those immediate dollars to get out and deal with that," said Anya Lawler, policy advocate for the Western Center on Law and Poverty.

Newsom is also calling for a fresh $20 million to provide legal assistance to people facing eviction or in disputes with landlords and another $40 million that would help the state's public colleges and universities aid homeless students. His total spending on homelessness is up by several hundred million dollars from January.

He had already called for putting half a billion dollars into a tax credit program for building low income housing.

More broadly, Newsom's budget aimed at addressing California's high cost of living by spending $1.2 billion more to increase a tax credit for working families with young children from $200 to $1,000.

"We call it a cost-of-living refund. Others will call it a tax cut," Newsom said.

Newsom's budget announcement kicks off negotiations with lawmakers, who must pass a budget by June 15 or lose their pay. California's projected revenue grew by $4.5 billion since January after state officials collected more individual income taxes in April than they had planned.

But Newsom said he's "feeling anxiety" about the next recession, which he said could cost the state $70 billion in revenue and lead to a deficit of $40 billion over three years. That's why he wants to spend $15 billion to pay down debt and fill the state's reserves.

It's a message that echoes his predecessor, fellow Democrat Jerry Brown, who prioritized saving money in anticipation of a coming economic downturn that could wipe out tens of millions of dollars in state revenue.

"The headwinds are real," Newsom said.

Still, Newsom's proposal spends significantly on public education, including expanding preschool programs and spending more on teacher training. In total, Newsom said about 45 percent of state spending will go to public education.

Democratic Assemblyman Phil Ting, who chairs the budget committee, said the budget must invest in the state's social infrastructure.

"At a time of unparalleled prosperity in our state, nearly 20% of Californians live in poverty and millions more are living right on the edge," he said.

Republicans criticized Newsom for including new new taxes that would pay for clean drinking water in rural areas and bolster the state's 911 emergency system.

"We already have the revenue to do those things without increasing taxes," Assembly Budget Committee vice chairman Jay Obernolte said.

But others praised Newsom's budget for its commitment to spending on the homeless. They included Fresno Mayor Lee Brand, who said Newsom's $650 million in aid to local governments was "very encouraging."

The issue is personal for Brand, who said his daughter was homeless for several years while battling drug addiction. He said she has now turned her life around and lives drug-free in Indiana, where she has a job in manufacturing.

"I learned don't give up on people," he said. "You see people out there, they all were at one time sons and daughters."

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Associated Press writer Kathleen Ronayne contributed.