Newsom highlight his budget agenda for this year for the past counterspace for his state, education, homelessness and infrastructure investment. Welcome to the 2024 25 project presentation. Revery familiar for all those wo have been here. Past out the large format through because as not just those in previous for decades and decades, weve come to expect volatility of our system. You can see here the orange line, but the three revenues, an ekg chart, goes up in the good times and down in the bad times. You can see spikes representing Capital Gains that reflect the larger narrative in the presentation of the story of correction, normalization after a period of tremendous amount of distortion. Thats been resented in revenue collection in the state. Take a look at the state, its 2000. We had spikes in the past, 10. 4 of income tax collection. You can see 11. 6 historically high number represented in 2021 and not a drop look at the projections to about 5 total remarkable swings. I mentioned the average this time last year looking back was about 5. 18 so we are getting back to the story of collection, normalization. Back at about 5 , projecting about 5 going back to what we traditionally seen after unprecedented distortion. The surpluses though is. Remind you be in 2021 we have the prior year, a twoyear period where we had 177. 7 billion dollars operating surplus. 74. 3 billion one year operating surplus in the nexus 101. 4 billion dollars. The express you recall last year, 31. 7 billion shortfall. Cf distortions getting back to what we have seen in the past. Lets jump right in. The budget we are sending to the legislature again begins the process. The process of engagement, twoway conversation with the legislature. Not januarys budget but the may budget and that explains a lot of the discrepancy that invariably that you will inquire about. 37 point 9 billion projected shortfall that we are looking to close. I want to level with you off the bat. Grants and homeless efforts through novel programs on key and ongoing commitments we made in the past two local partners. As it relates to ongoing commitment of an additional billing dollars, not similar to where we were this time last year, we want to work on the accountability side and with the legislature and we will try to land and make rightsizing back commitment but no midyear cuts to the multiyear commitment. As it relates to mental health, the same 4. 7 billion unprecedented investments in, Wellness CentersWellness Coaches in the Public Education system no state has invested this 26, of focusing on early training, a commitment, a result in Childrens Mental Health and infrastructure clinic the infra structure we are building out, all in at the end of this calendar year end the opportunity. 11,001,150 treatment beds just shy of 27000 treatment slots are part of that. Unprecedented opportunity in a matter of weeks the people in California Well determined with profound impact accelerate efforts in housing, homelessness. In the department of justice with our partners at the local level and federal partners not just state and local partners. In Community Policing efforts are security grants around zaila zine. Our Community Policing efforts, nonprofit security grants. That was one hundred 40 million to go back five years, but for the purposes of this slide. We are investing tens of millions of dollars into addressing the wellness and wellbeing of those men and women in uniform. I will remind people we have been investing in recruiting one thousand new chp officers and have another Economy Class last friday. I am proud of th in terms of these budgets and can walk you through that. Formh cities like san francisco. More work we will need to do in oakland. Efforts around gun violence and i think there is an additional 67 million last year. Investments we have significantly increased as it relates to victim services. Those commitments maintain themselves. Those are multiyear. You can talk to joe and the team in a moment, talk about whats remaining in terms of these budgets. I will walk you through that in for detail, as it relates to the detail on retail theft. This is our own accountability sheet but its important for folks to know. Its one thing to put out a press release and talk about money. 52 Sheriffs Police department have received upward of a quarter of 8 million in new grants to combat retail theft. 13 da offices to advance vertical prosecution. This new unit, the special operations unit, have done a wonderful job in this space. New task forces, prosecution teams. We are not just waking up to this. Chp led efforts have led to thousands of arrests, ongoing investigations, recovery of stolen items. We do, for those who are interested, every tuesday maybe people are not excited to read about it, i think its important. We do take down tuesdays, update people on the partnerships being formed in 58 counties, 470 plus cities. Unprecedented effort in our state history. I am really proud of the work they are doing. I am bewildered by some that dont even ask for the grants but criticize and complain. Thats just me talking out loud, but i sure that as a point of honest accountability and people government. Hats off to each and every one of them. Partnership at the end of the day. We need that local partnership. I say this about every issue, a states vision and commitment is realized at the local level. I know this is on your bingo cards so i will make it easy. Local is the term. I understood more today than five years ago before i took this job. As it relates to dealing with fentanyl and opioids, we continue to make investments. 88 million was on the Law Enforcement side. We got 130 men and women in uniform from the National Guard working on drug interdiction across california. We have 63 at the border. It has been hand in glove operation with border control, a fantastic partnership with the largest land board and the western hemisphere. It is not guys with backpacks, it is folks preening for attention, so you should shoot on sight. The overwhelming majority of fentanyl is coming through ports of entry, land ports. National guard men and women are helping support and supplement that work. No one is playing politics down there, at least in california. We are Building Partnerships and that is represented in the work they are doing throughout the state, the partnerships that have been formed in terms of not just enforcement but intelligence gathering on the regional side of the opioid and principal epidemic that has ants. We are committed to that. Some of these things you know well, i am just repeating what you already know but just reminding you that commitment means steady as we go forward. As it relates to strong and steady, a strong and steady economy requires a strong and steady workforce. Cannot have an Economic Development strategy without workforce development. Career Economic Education is something we will take to the next level. First, let me level set in terms of the commitments on prop 98. This is a prop 98 slide. 198 billion, interestingly despite a shortfall, the perpupil total is roughly what it was last year. So you dont accuse me of misleading you, that previous slide, 17,653 perpupil, last year it was 17,661, so eight dollars difference. Not profound, which is interesting. We can get a q a and joe can be kale you with the history of prop 98, the nuances and details, talk about why thats the case. Its pretty common sense on the basis of population. That is the perpupil on education. As relates to the commitments in the past, we maintained these multiyear commitments as it relates to addressing that mitigation or advancing the litigation as it relates to addressing loss and advancing efforts around learning recovery. Childrens and Behavioral Health i continue to highlight it because my wife is here, a point of pride, and i could not be more proud of the legislature for their support of those efforts, including community schools. This longterm commitment is something i promoted years ago. 200 million that first year. That is all part of this larger educational reform. We created a brandnew grade, tk for all. I dont know there are many states transforming their educational system in terms of investments like we are, including the educator workforce , special education reforms. You think i am overstating, let me give you highlights. Before and after school was a promise. People were identified with that issue. No one has advanced it like we were able to the last few years, working with legislators to reimagine the school day, looking at tk. Universal appeal efforts are continuing. Prop 20 will advance that. We are committed to working with the black caucus. Dont touch the equity multiplier, we did not as it relates to the work we are trying to do to close that gap. 300 million is included from last years budget where we are advancing it here today. As it relates to commitments that need to be advanced, it is the compact stabilize their multiyear outlook to allow them to make investments without a shortterm mindset. We are proud of that. As a current but former active participant as the former lieutenant governor, it was frustrating to plan your year not knowing what was going to happen in the presentation of this. Here is a longwinded point. We are, yes, deferring but not delaying, and there is a distinction that will allow ufc and csu for one year to borrow against that commitment, so that commitment will remain even thoroughly store it for budgetary benefit. I make this point to reinforce that the ust and csu are in a position to advance u. S. Dollars to get reimbursed for it next year. As it relates to issues of affordability, you see the. Modest adjustments. Adjustments to middleclass scholarships will continue for funding we have advanced in the past but it will take an augmentation moving forward. Joe and the team, we are keeping that baseline commitment and pulling back as it relates to the efforts to balance. We can talk about that in a moment. I want to reinforce that commitment and resolve. We are in the process of advancing the master plan. Perhaps it is overused, the master plan frame, but i dont want to understate the consequential nature of the new master plan. Looking at new pathways, these passports, skills maps and transcripts. You may have hurt me in 2019 when i was boring the hell out of every one of you, talking about the singapore model and other strategies. We are rolling all of this up into this new master plan. I am going to we are going to get done. I just want to highlight education. The minutes of climate substantially but the biggest news is the work the Biden Administration has done, just extraordinary. We couldnt have imagined dollars coming into the state cap new climate conditions thats helpedco supplement modet cuts inpe this space. Fiftyeight billingng plus bella commitment focus on in her detailing oversight. Climate crisis is a fossil fuel crisis, its not even complex. Thats not even good, its prettyla transparent accountability has been lacking california will do its job to lead by example as we streamline green energy. Unless you get large scale projects up and operationalized in real time, your misleading folks and its rules worked so hard and is become so important we continue to advance across the. This commitment to continue down that path. Speaking of continuing down that path, i want to thank them for their International Climate and highlight the work weve been doing. Simply no other state in the world that is able to develop the kind of a relationships with National Governments as the state of california. I had like this because its appointed by as a california and appointed bride, guys very mindful that with the hottest year recorded on planet earth last year. One of the hottest decembers in california. One of the hottest to sims weve recorded and this is serious stuff. So we maintain our commitments, climate corps. I highlight climate because when in doubt highlight something that should excite people. The three of you that know about it. [laughing] the largest dam removal in u. S. History, the largest River Restoration project in u. S. History. I think thats pretty exciting. Its happening in your state and happening in real time. So it all worked our tails off to get this done and its moving as well as the good work that is being done on salt and ncm partnership now with the Biden Administration. Its been a missing piece, the federal government, the commitment, theres some new money in this space but 30 by 30 because the team would be upset if i didnt focus on biodiversity and land, acquisitions, those commitments are just that, commitments. Water, we are also committed to continuing to do what we can. We got that ongoing fund for safe, reliable and affordable drinking water. We are consolidating more and more ofe these smaller wells wh a lot more work to do in the space but we are committed into space. Thats why im highlighting it. You can see the work again passenger of our commitment remain intact. This is again about not just promoting promises by keeping them. This above ground off stream water storageeg project, it was the first beneficiary of the new stream legislation. I highlight it because its important for usni to capture during these wet years. Not dissimilar to the importance of reforming proposition two to capture not more water in this case but resources during the good years in our rainy day reserve. Its interesting its called rainy day reserve. Delta contains also is foundational about that as well. We just got that eir moved in and a lot of momentum and progress in that space. 2. 7, its a familiar number. Were not cutting it. Our commitment vegetation management, force management, community hardening, all that work. Some good news we had some delays, issues but not denials. This relates to the seven c130s. We got them. They are here. E. Biden administration after a lot of hard work, meetings, and gone and others, we finally said can we just take these damn things and lets just stop this . It was taking forever. So we get seven of the back, about 33 million bucks i will get them all operationalized and they are here. So anyway i just that exciting. Seven new c130s, you will see them hopefully he will have to see them because there will be no forest fires, but you will see them. Almostst assuredly. But our commitments to mitigate and reduce the intensity of these is reflected in this budget. I will say, full disclosure, this is extended out, is a multiyear commitments so youll recall the last two years we did 30 your commitments, and we had five year commitment, secure commitments. Youll see part of, you can walk to all this and youve got in the 170 something pages youll have in front of you but they will walk yout through from fie to seven years, well stretch their dollars. Again these areh all incrementl dollars that will benefit, the prevented when we hadad these bg surpluses. So theres some augmentation your butt the dollar figure remains. By the way just really proud of the work nancy editing are doing with cal fire and others with the ai work. We really have become a leader in innovation as relates to early fire detection and suppression technologies, the Alert Wildfire Program in particular now updated by ai has got a lot of International Attention and just highlighted because its novel and is part of i think the narrative that is california. And asni part of dominance not just a relates to leadership in that space but also in terms of economic dominance, against its largest economy in the world, closing in on germany. To be the fourth. Were not done yet. Dont give up on us there. We continue not to give up as well on the backbone of our economy, thats small businessmen and women. I knew a thing or two about this is a a small businessperson with with a blind trust i will discuss it. Start right out of college small little business, one pat kelly, grew that to about 23 businesse businesses, about 1000 points. Say that that, that is often do not impress anyone, anyone butut to impress upon my passion for entrepreneurialism, for free enterprise, small business, 4. 2 billion went out in grants to small business, over 320,000 Small Businesses benefited, grants, not loans, not tax credit. Cal competes has been, entertainment, dented make this a gentleman highlight that all the time. Doesnt seem to get again its like to take down it would be nice if 2024 was the year of trying to find good things to focus on. Theres lots of good thats come out of cal competes. I think they did a big Detailed Analysis of the efficacy of the program and soys we want to maintain our competitiveness and recognize we have to compete more and more states that are, well, what we ended up now is competing against us and we got a lot of people out there that have desired to take us on. I think thats a healthy thing. Film tax credits, r d, vast majority will do there. The vast majority still is in place. Young child tax credit, no, it doesnt we do on the eitc state why, the young tax credits, those commitments remain. As relates to issues of jobs, i remember i talk a lot in this room different occasions not just the budget about regions rising together, back to begin states vision is bottom up, realize locally, not just top down. We have defined broadly 13 economic regions there we talk about california economy is not one economy. Its theab intersection of many different economies. When you are the size of 21 state populations combined, california, thats the way you need to look at Economic Development. So we have that to that commitment around his regional investment initiative, 600 million focusing on supporting our world partners with unprecedented support. So were committed too that. Theres some deferral although a bit of money, were stretching it out but were not denying those fundamental commitments. I can put on the side many of the commit was like 259 for k6 in collaborative, that money is going out as well but i will spare you that. But iin cannot spare you highlighting this partnership. I was in los angeles, it was one hell of an event forgive my language, what it really proud of it. Ag no one does what we do on quantum. You are going to a lot more about quantum computing. No one does what california does. Nsf is only funding one state or lease institutions of jose, california. No one does what we do. Noticing what were doing in him you know therapy and all of us become experts in that because we all know what an nra is now ethical and everything else. So we have worked with google inid nra. They provide is a little sigh, a former militia, like when youll get all depressed and to see a former mall say my grandfather was here, this is a great come on. Its part of the transformation and you see this old mulvaneys and what can happen . You cant get better than this, 700,000 ft. 2 of the best and the brightest minds in quantum and the best underbrush mike flynn immunology around the globe. It will attract truly the worlds leading talent. This is what we do best. Because of you, we were able to partnership with the legislature by 200 million for this institute. Its total cost, 876 but the commitment from the state was 200 billion. We are maintaining that and the philanthropy has come in in a big way. Its just exciting andy. It givs you real confidence in her future. I had at it. Also wanted to add and we will get solutions right after this, i want to add a little highlight what we announce yesterday because its been a long day. Team is in working a couple years on this. I want a more transparency of the thank you deserved it. Invesn the state in the next 10 years. Not only because of our states effort and our own gas tax which is not just a tax roads, bridges, infrastructure and federal dollars. 41 billion in projects that are operationalized now. You know the categories are well defined. We just put out this build. Ca. Gov map yesterday. I encourage people, in your own community, what is happening . Where are tax dollars going . It is a question i get all the down. We are trying to answer this. It is not perfect yet. We just rolled it out. I get it. This is a big first step. We want to start doing this across the board. If there is a narrative for this year, it is about accountability. Scratching those tax dollars scratc stretching those tax dollars. Personally, you might want to know what is happening in your neighborhood. Other projects over budget . Under budget . Years and years behind . We try to be as transparent as we can because you have a right to know how we are doing. We are not trying to mislead folks. At the same time it is such a Staggering Amount of money. We put it in historic terms. We talked about the good old days of the 1950s and 1960s, this is getting back to that. These are pat brownera investments. I do not think people have fully absorbed that. Slightly overstated that. You came here for this slide. Well, the next one. [laughter] that is, how are you going to close a 37. 9 billion shortfall. Here is how. Things that are familiar to you. You saw some of this last year. We anticipated this moment. I mentioned the 101. 4 billion surplus. More than 90 of that budget we set aside from onetime purposes. We maxed out on our reserves. We need to reform that. We need to capture more than 10 . That is my humble opinion. That will take some work, public support, education and partnership. But we maxed out on that. We paid down pension liability. We intentionally you may recall i had a slide that said 99 of all that and everyone laughed and thought it was a typo. We negotiated with the legislature but we still kept did at 93 . That was a historical high in terms of onetime surpluses for onetime use. Multiple commitments we could fall back or extend. Part of our fiscal management. We have 91. 4 billion of capacity in the state as of november. A few weeks ago. 91. 4 billion. From a reserves perspective, because of the fiscal planning and management and the onetime framework of focus it allows us for a second year to do something again that should be familiar in terms of how we ultimately balance. That is around reserves, revenue. Primarily an mco, 3. 8 million. That is not a new business tax. There is no wealth tax or income tax. Im sure you all want to write about that so i will walk you through the details or they will walk you through the details. Lets talk about that resilience. Rainy day withdrawal. We will pull 13. 1 billion from the two reserve accounts. I do not want to confuse you. We had it out with finance, my team. Should not include the 5. 7 . It is exactly 5. 7 billion we are pulling from the reserve. I will get to that. I want to seed you with that so you understand the. We are pulling 18. 8 billion. 13. 1 billion. The special fund, 1. 4 million. That if you roughly what we are doing. It allows us to maintain 18. 4 billion in reserves. It includes a fiscal rainy day fund, which we are pulling 5. 7 billion this year. By the way, you will see a new reserve because we are adding we added to our own shortfall in terms of our need to balance an additional 3. 4 billion in this sfeu, which is basically a Checking Account or a line of credit. We are going to add an additional 3. 4 billion for emergencies and uncertainties so that added to our burden, if that makes sense. If it does not, i am happy to discuss it. 13. 1 billion. Two reserves. An additional 5. 7 billion on 98 that is not on this slide. Maintaining these reserves for a rainy day. Also, continuing our commitment to pay down longterm obligations. I think this is critical. The last five years, 12. 4 billion paying down unfunded liabilities. Not just traditional retirement. Next four years, we are committing 8. 6 billion. You see the 2. 1 billion we are continuing to invest in paying down longterm debt. We are maintaining that consciousness and focus. Lets talk about the belt tightening. You might have seen a number of months back we said no new cars. No travel that is nonessential. Namor cell phones. Iphone 12 or 20. You can live with the 19. What is it now . 15 . You did not get the memo. [laughter] as well as our fleet, new cars. We did what you do at home. People say, hold on. Let me remind you of something of this longer preamble. All of this uncertainty happened because we experienced something we have never experienced in modern history in this state. Why is there a may revise . There is a may revise purposely because it allows you to revise your estimates on the basis of what you have actually received in terms of revenue and tax collection because we all know tax day were reduced to in california, it used to be in april. The irs extended it twice. It was extended to october 16 and then extended again to november 16. The legislative analysts went in estimating about 47 billion of revenue in their may revise that did not appear. We project about 43 billion in revenue, 42. 9 billion, that did not appear. We were not too far off on our guesstimates but all of us had a blindfold on. Last year we balanced a budget that would have been a little higher, significantly higher, the deficit, and we would have attended to most of those issues in the may revise and balanced budget but we did not know because we were not privy to that information that every other state and historically all prior budgets had benefited from. So, when we finally got those receipts in, we immediately moved to advance some efforts and continue the work we are doing. By the way you may recall a couple years ago even when things were good, we reduced overall efficiency of Government Services by 5 . 239 million the first year. The point is everyone lectures me, you should belt tightening that is what we have been doing. We extended even more efforts in november and december. That is topline. Here is a little bit more of what you came to understand. 3. 4 billion. I will let joe and the team get through all these details. The climate maintaining, roughly 90 . There is some reductions, particularly because we got all those federal dollars. Infrastructure, housing. 40 billion since 2019 and housing. We are going to make some adjustments on some of these regional grants, infrastructure grants. 700 and 62. 5 billion on vacancies 762. 5 million on vacancies. We will pull some money back. We also have a school bond that will be out. That is part of the belt tightening in terms of the balance. Delays and deferrals is the third category. Transit, the capital. 7 billion. You already know about that. Some of these clinic grants. The team look into the details. Not denied, just delayed. Most of this came from abundance beyond our wildest expectation and we will push it out. In order to get where we need to go. Again, there is your list. This adds up to the number. It allows us to put 3. 4 billion into that line of credit, that Checking Account, as well, and continue to make investments in our longterm unfunded liabilities. That is this years presentation. It goes without saying but i hope we all considered a lot of the reporting on this i think my mom told me seek first to understand before you are understood as opposed to,