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California’s Budget Deficit Is Not the Problem | Connecting California

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California’s Budget Deficit Is Not the Problem | Connecting California


California’s constitution is full of guarantees and formulas that ratchet up spending on favored programs, writes columnist Joe Mathews, even when revenues drop and the budget is out of balance. California Governor Gavin Newsom during a news conference on May 10, 2024. Courtesy of AP Photo/Rich Pedroncelli.

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You can tune out Gov. Newsom when he talks about the state’s big budget deficit. Ignore the pleas of Democrats who control the legislature, too. And turn the volume down when Sacramento lobbies complain about the proposed cuts.

California’s ballooning budget deficits, and the cuts to services they cause, are not a crisis. They are not really news. They are, sadly, normal and predictable.

And they are grounded not in budgeting mistakes—lapses of discipline in collecting revenue or controlling spending—but in our state constitution and in a reality so paradoxical it would make Kafka blush:

Our constitution requires the state to balance its budget. But balancing the state budget requires violating the state constitution.

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How’s that? Because on fiscal matters, our constitution is effectively a ratchet. The document is full of guarantees and formulas, approved by voters, that ratchet up spending on favored programs, even when revenues drop and the state budget is out of balance.

Meanwhile, the constitution also has plenty of voter-approved limits on taxes and fees. These limits ratchet down revenues in slower economic times and make it harder for the state and local governments to raise revenues to cover budget increases.

Californians may have forgotten about the ratchet. The past decade was an unusual one for the state budget, as stock market growth and federal pandemic relief sent government revenues soaring and created surpluses.

But with those revenue sources gone or declining, California’s Kafkaesque constitution is reasserting itself and producing deficits projected recently to range anywhere from $27 billion to $70 billion.

That leaves Gov. Newsom stuck and left to do with the budget what all California governors must:

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Violate the constitution.

First, he’s not offering a balanced budget. The spending delays, draw-downs on reserves, and cuts he’s proposing to state operations eliminate only about half of the deficit.

Second, to close the gap, he’s violating the state’s education funding guarantee, a voter-approved formula called Prop 98.

Our constitution requires the state to balance its budget. But balancing the state budget requires violating the state constitution.

Prop 98 is, famously, so complicated that no one really understands it. (It involves three complex formulas to determine state funding, and it’s never clear really clear which formula will apply in which year.) The main effect of Prop 98 is to keep pushing education spending up; it’s one of the biggest spending ratchets in our constitutional budget ratchet.

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Newsom’s maneuver is a sneaky ploy to reduce Prop 98’s ratchet effect by changing the inputs to the formula. Newsom’s budget proposes to travel back in time and reclassify certain moneys spent on education in previous years as non-education spending.

This maneuver is intended to lower the funding base underneath the formulas—helping him “balance the budget” while allowing the ratchet to do its work.

The problem (besides the inherent ridiculousness of having to bend the law in this manner) is that the lower funding base would mean tens of billions less in school funding in future years.

Yes, my fellow Californians, “screw the kids” remains the real, if unofficial, state motto.

The powerful education lobby is crying foul, as are some Democrats and local governments. Newsom defends himself by saying he’s required to balance the budget.

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The problem with this blame game—and demands that Newsom reverse the cuts—is that it defines the discussion as being about the budget. The real problem is California’s broken constitution.

Finding tens of billions of dollars in cuts for anything is hard. Health programs have all kinds of court-ordered, statutory, and, in some cases, constitutional protections. Cuts to prisons and state agencies require concessions from politically powerful labor unions. Tax increases run up against Prop 13 and other state revenue limits.

That doesn’t mean I’m trying to let Newsom, the Democratic supermajority in the legislature, and other powerful Sacramento interests off the hook for the state’s budget problems. It’s the exact opposite. The governor, Democrats, and interest groups are responsible for the budget mess—because they’ve had plenty of time to fix the constitution, and haven’t even tried.

Gavin Newsom has been in statewide office since 2011. California Democrats have had full control of Sacramento since that same year. And powerful unions and other lobbies have held sway for far longer than that.

All of these politicians and lobbies know very well that the California constitution is broken. They have long had the power to come together and give the state the new constitution it needs—without all the fiscal ratchets that drive up spending and limit revenues.

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But they haven’t been willing to lead and change the system. They have focused instead on building their own power within this broken system. Jerry Brown and other California leaders have spent the past decades dismissing calls for a constitutional rewrite (including my own, via the book California Crackup) as unrealistic.

But state leaders are the ones who have lost touch with reality. They claim they can fix the budget, but they can’t because the constitution won’t let them.  And they won’t fix the constitution because they say it’s politically impossible. How long can they keep saying this—and keep pretending they are doing their jobs?

When the governor and legislators say they are trying to solve the problem, they aren’t telling the truth. This miserable budget, full of cuts to education, is a product of the budget system, and the constitution, that they themselves have chosen.



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Smoldering legacy: A toxic fire prompts new safety rules as California’s green-power shift speeds ahead

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Smoldering legacy: A toxic fire prompts new safety rules as California’s green-power shift speeds ahead


It’s been 16 months since a massive fire tore through one of the world’s largest lithium-ion battery storage facilities in rural Monterey County, spewing toxic gas into the air as it smoldered for several days, and, even today, cleanup is far from complete.

It will take at least several more months, and possibly another year, before the charred, waterfront power plant owned by Texas-based Vistra Corp. is cleared, Monterey County Supervisor Glenn Church said.

The process is slow because it is dangerous, with thousands of batteries yet to be removed and crews working carefully to avoid reigniting a fire. “Of course, quicker would be better, but safety has to be first,” Church said.

The blaze in Moss Landing provoked hostility toward battery projects in California, where state officials are pursuing an aggressive goal of 100% clean energy usage by 2045 to increase the grid’s capacity and combat the catastrophic effects of climate change.

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A safe energy transition

Battery energy storage systems hold excess energy generated during the day — by solar panels, for instance — and release it into the power grid during times of high demand, including evening hours. California has invested heavily in battery storage, which, my colleague Hayley Smith reported, grew more than 3,000% from 500 megawatts in 2020 to more than 15,700 megawatts in 2025.

A new bipartisan bill introduced this month in the U.S. House of Representatives aims to keep this transition safe.

The Better Energy Storage and Safety Act would dedicate federal funding of $30 million annually over the next five years toward research and stress testing for the systems.

It was authored by Rep. Jimmy Panetta, a Democrat whose Central Coast district includes Moss Landing, and co-led by Rep. Pat Harrigan, a North Carolina Republican.

Despite efforts by the Trump administration to stymie green energy, Panetta said in an interview, “you have to accept the reality of renewables … That’s why we want to ensure that it’s as safe as possible.”

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A fast energy transition

The Moss Landing fire has represented the proverbial elephant in the room in the midst of California’s rapid energy transition, Church said.

He has called for more local control over where battery systems are built and been a vocal advocate for more safety regulations, saying the catastrophe in Moss Landing should be learned from, not written off as “an inconvenient accident.”

With proper engineering, lithium-ion battery storage sites pose little risk of catching fire, Shirley Meng, a molecular engineering professor at the University of Chicago and internationally known battery expert, told me last fall. She said safety has improved dramatically in recent years and that the failure rate is about 1 in 10 million for all types of lithium-ion batteries.

California is now speeding review for large-scale renewable energy projects through a new fast-track permitting program that does not require sign-off from county and municipal governments — a fast-track process that Church has criticized.

Last fall, Gov. Gavin Newsom signed a new state law — prompted by the Moss Landing accident— that requires battery storage safety standards and requires developers to coordinate closely with local fire departments.

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Stacey Shepard, a spokesperson for the California Energy Commission, said in an email that “today’s battery systems are governed by rigorous safety standards,” use improved technology and “are placed in outdoor containers rather than inside buildings,” unlike in Moss Landing site.

The cause of the Moss Landing fire is still under investigation

Firefighters let it burn for days, citing the dangers of dousing lithium-ion battery fires with water, which can cause dangerous chemical reactions.

The blaze ignited inside a former turbine building that contained a 300-megawatt system made up of about 4,500 cabinets, each containing 22 individual battery modules, according to Vistra Corp.

Of the 99,000 individual LG battery modules in the building, about 54,450 burned, according to Vistra. Justin Daily, a spokesman for the company, said in an email that as of May 8, more than 31,000 battery modules had been removed, de-energized and shipped to recycling facilities.

“We are now working to enable safe access to batteries in the damaged portion of the building,” he said.

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Today’s top stories

A bird flies by a plume of smoke from the Sandy fire off Redwood Grove Court in Simi Valley.

(Kayla Bartkowski / Los Angeles Times)

Multiple wildfires trigger unhealthful air quality alert in SoCal

Apartment scouts are on the rise in Los Angeles

  • They aren’t real estate agents or brokers. Rather, they are savvy entrepreneurs who tour apartments, share listings online and, in some cases, work one-on-one with clients to find a place that fits their specific aesthetic and budget.
  • The demand for apartment scouts highlights the pressures of L.A.’s competitive rental market, where vacancies are scarce and rental rates are among the highest in the country.

What else is going on

Commentary and opinions

This morning’s must-read

Another must-read

For your downtime

Concept art showing a ship soaring through a gas planet.

On May 22, Disneyland’s Millennium Falcon: Smugglers Run will include a new mission as well as new destinations such as the gas-like locale of Bespin, seen here in concept art provided by Disney. The tweaks are tied to the film “The Mandalorian and Grogu.”

(Disney Parks)

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Going out

Staying in

Question of the day: Sticker shock: Send us examples of California houses with sticker prices that truly shocked you.

Is it worse than this burnt-out three-bedroom in Torrance that sold for over $1 million?
Email us at essentialcalifornia@latimes.com, and your response might appear in the newsletter this week.

And finally … the photo of the day

A firefighter clears brush during the Sandy fire

A firefighter pauses while clearing brush in the Sandy fire in Simi Valley.

(Kayla Bartkowski / Los Angeles Times)

Today’s photo is from Times photographer Kayla Bartkowski on a hill in Simi Valley near the Sandy fire, one of multiple blazes consuming more than 20,000 acres.

Have a great day, from the Essential California team

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Hailey Branson-Potts, staff reporter
Hugo Martín, assistant editor, Fast Break desk
Kevinisha Walker, multiplatform editor
Andrew J. Campa, weekend writer
Karim Doumar, head of newsletters

How can we make this newsletter more useful? Send comments to essentialcalifornia@latimes.com.



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They used to battle in CA elections. Now, they back the same candidate

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They used to battle in CA elections. Now, they back the same candidate


Which of these is least likely?

Kendrick Lamar and Drake squashing their feud?

Giants fans and Dodgers fans sharing high-fives? 

Or California charter schools endorsing the same candidate for superintendent as the state’s largest teachers’ union?

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If you remember the 2018 election, you’d probably vote for the pigs-flying scenario of the California Charter Schools Association and the California Teachers Association being on the same page in an election year. Back then, advocates for both sides shelled out tens of millions of dollars in the contest between union-supported Tony Thurmond and charter school-backed Marshall Tuck. Thurmond came out ahead. 

But this year, both associations are rallying behind candidate Richard Barrera: Four months after the teachers’ union announced its endorsement of the president of the San Diego Unified school board, the charter schools association this week said it’s backing Barrera too — a move Barrera told me “came as a bit of a surprise.”

He pointed to two attributes of San Diego schools that might explain how the usually competing groups came to support his candidacy. First, unlike in other regions, the politics surrounding San Diego school board races or other education issues did not typically pit “charters versus union.” In fact, the percentage of students attending charters grew while he was on the board. 

And second, the school board included charters when it distributed money to improve school facilities. That experience working on local facilities bonds established “a unique relationship between the charter and public schools that CCSA has told me that doesn’t exist in most places,” Barrera said.

In a statement, Gregory McGinity, the executive director of the charter association’s lobbying arm, said Barrera, “has shown that supporting educators and supporting high-quality charter public schools are not mutually exclusive.” 

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But don’t expect both groups’ backing of Barrera to mean they will agree with each other in the future. CTA President David Goldberg told me that while the union didn’t endorse Barrera to build a coalition with charters, he didn’t find the charter association’s support of Barrera “shocking” either.

  • Goldberg: “Sometimes even people who don’t see things the same way … we still want someone who is very capable running this department. That benefits all students.”



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New police video shows deadly standoff after deputy killed in California shooting | Fox News Video

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New police video shows deadly standoff after deputy killed in California shooting | Fox News Video


Bodycam and drone video show the deadly SWAT standoff after Tulare County Deputy Randy Hoppert was killed serving an eviction notice. Credit: Kern County Sheriff Office



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