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along with these other television providers, giving you a front row seat to democracy. >> next, california governor gavin newsom highlights his budget agenda for this year and the past fiscal challenges faced by the state. he also talks about education funding, homelessness, tax reform and infrastructure investment. >> welcome to the 2024-2025 budget presentation. very familiar for all of you that have been here. i think we passed out the larger format of the budget people are rummaging through but let me begin as we often do with a slide that has become more and more familiar, not just to those who have been to previous presentations but for californians. for decades and decades, we've come to expect the unexpected as it regards to the volatility of the tax system. you can see the orange line,

those are the big three revenues. it. looks like an ekg chart. it goes up during good times and down during bad times. it reflects i think the larger narrative of today's presentation and that is a story of correction, a story of normalization after a period of tremendous amounts of distortion. that distortion has been represented in the revenue collection in this state. take a look at this chart. 10.4%, that is the year 2000. we have had spikes in the past and revenue. 10.4%, that's the percentage of our income tax collection capital gains. 11.6%, historically high number represented in 2021. now a drop. we look at the projections going out to about 5%.

those are remarkable swings in terms of that revenue collection as it relates to capital gains on the overall revenue. that said, the 5% you may recall this time last year, i mentioned the average this time last year of capital gains looking back was about 5.18%. we are back in about 5%. we are projecting about 5% going back to what we had traditionally seen after a period of unprecedented distortion. we will talk a little more about that distortion in the context of the deficits and surpluses. i will remind you in 20 21 and the prior year, we had a two year period where we had 177.7

billion dollar operating surplus. i will repeat that. the next year was $101.4 billion surplus. only to experience if you recall last year at $31.7 billion shortfall. correction after a period of distortions getting back to what we have seen in the past. let's jump right in. the budget we are sending to the legislature again begins the process. the process of engagement, two-way conversation with the legislature.

not january's 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.

>> we want to work on the accountability side of this and want to work with the legislature.

no cuts, midyear cuts, no cuts to the commitments. because it relates to mental health, save will hold here, the same four point $7 billion unprecedented investment in our youth, the wellness centers, wellness coaches. no state in american history has invented -- invested this kind of money. we are focusing on early prevention, trading brain health early. focus, commitment, resolve on children's mental health. the infrastructure we are building with our pilot, eight counties all at the end of this calendar year. and the opportunity that presents itself with the mental health services act.

11,150 treatment beds, just shy of 27,000 treatment slots are part of that initiative. unprecedented opportunity in a manner of weeks -- a matter of weeks that the state of california will determine that we'll have a profound impact on accelerating efforts for housing, homelessness, and behavioral health. as it relates to keeping the state safe, we are not new to this. a number of years ago you may recall the work we did with our department of justice, with our partners at the local level, our federal partners, not just state and local partners. i will talk more on that in a moment. that is just the enforcement side of our efforts around

opioid, festival, and issues related to growing concerns 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

well-being 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 the work that has been done at the chp to recruit and retain officers. that has paid dividends on partnerships we have formed with 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 multi-year. you can talk to joe and the team in a moment, talk about what's 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 it's important for folks to know. it's 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 it's important. we do take down tuesday's, 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 don't even ask for the grants but criticize and complain.

that's 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

state's 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 per-pupil total is roughly what it was last year.

so you don't accuse me of misleading you, that previous slide, 17,653 per-pupil, 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 that's the case. it's pretty common sense on the basis of population. that is the per-pupil 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. children's 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 long-term commitment is something i promoted years ago. $200 million that first year. that is all part of this larger educational reform. we created a brand-new grade, tk for all. i don't 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. don't 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 year's 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 short-term 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 long-winded 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 middle-class 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 don't 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 this done and excited. the team are working hard on this. i want to highlight the career education. commitments on climate are substantially there. but the biggest news i think is the work that the biden administration has done. it is extraordinary. a few years ago could have never imagined 10 plus billion dollars coming into the state in new climate commitments. that helped supplement the modest cuts we are making in this space. it is a 58 billion feller plus commitment. it is a little more modest now as it relates to the details. i will get to that in a moment. one thing we are focused on and are very detailed in our oversightclimate crisis after aa fossil fuel crisis.

they've been lying to us for decades. that's not even particularly -- that is pretty transparent. it's pretty obvious. california will continue to lead by example. you can call a big game about low carbon and green growth, but unless you get large-scale projects up and operationalized in real time, that's -- you are misleading folks. that's why the streamlining rules we work so hard with the legislature have become so important. i want to thank the new speaker who is a particular advocate and champion of a lot of those efforts in his commitment to continue down that path. speaking of continuing down a path, i want to applaud previous governors for international leadership on climate and highlight the work we've been doing.

japan, australia, new zealand and the netherlands, a lot of understanding and we are signing a lot of good work. i have a next level climate team. they have done a magnificent job working to develop these partnerships. there's no other state in the world that is able to develop the kind of relationships with national governments as the state of california. we are very mindful we had the hottest year recorded on planet earth last year. one of the hottest decembers in california. this is serious stuff. we maintain our commitment to climate. it should excite people.

of the three of you that know about it. [laughter] it is the largest dam removal in u.s. history and restoration project in u.s. history. i think that is pretty exciting and it is happening in your state and happening in real time. we all walk -- worked our tails off to get this done. as well as the good work being done on salt and see as well as with the biden administration, it has been a missing piece of the federal government, but with their commitment there's new money in the space. the team would be upset if i did not focus on biodiversity and land acquisitions. water, we are also committed to doing whatever we can. we have the ongoing fund for safe, reliable and affordable drinking water. we are consolidating more and more wells and we are committed

in the space that's why i'm highlighting it. you can see the work with the conservation act. the vast majority of our commitments remain intact. this is about not just promoting promises but keeping them. this is aboveground, off stream water storage project. the first beneficiary of the new streamlining legislation. i highlighted it because it is important for us to capture during these wet years. not just similar to the importance of performing proposition to -- proposition 22 caption not water but resources during the good years in our rainy day reserve. interesting it's called rainy day reserve. delta conveyance also is foundational he about that as well. we just got that eir moved in. there's a lot of momentum and

progress in that pace -- space. 2.7 is a familiar number. vegetation management, force management -- forest management, all that. the seven c-130s, we got them. they are here. the biden administration, after a lot of hard work, meetings, the pentagon and others, we finally said, can we just take these things? it was taking forever. we got seven of them back, about $33 million and we will get them all operationalized and they are here. that's exciting. seven new c-130s. hopefully you never have to see them because there will be no forest fires, but you will see them. [laughter] most assuredly. but our commitments to mitigate and reduce the intensity of

these is reflected in this budget. i will save for disclosure, this is extended outcome of these are multiyear commitments. you will recall in the last few years we did 30 year commitments, five year and six year. this is -- you can walk through this in the 170 something pages, but they will walk you through from five to seven years we will stretch the dollars. these are incremental dollars that we benefited from when we had these surpluses. the dollar figure remains. just really proud of the work nancy and her team are doing with calfire and others with the ai work. we really have become a leader in innovation as it relates to early fire detection and suppression technologies, the alert wildfire program in particular aided by ai has gotten a lot of international attention.

i want to highlight it because it's novel and part of the narrative that is california. and it's part of the narrative of dominance. not just as it relates to leadership and that space, but also economic dominance of the fifth largest economy in on germany. we will be the fourth. don't give up on us. we continue not to give up on the i know a thing or two about this as a small businessperson. with a blind trust, so i will not discuss it. i started right out of college, small business, one full-time employee. 23 businesses at peak, about 1000 employees. i said to impress upon you my passion for entrepreneurialism. free enterprise. small business.

$4.2 billion went out in grants to small business. over 320,000 small businesses. grants, not loans or tax credits. the team has done a magnificent job. we highlight that all the time. it is like takedown tuesday. it would be nice if 2020 for was the year -- 2024 with the year of trying to find good things to focus on. think there was a big detailed analysis of the efficacy of the program. we want to maintain our competitiveness and recognize that we have to compete with more and more states that are -- the world we invented is competing against us and we have a lot of people out there with a desire to take us on. i think that is a healthy thing. film tax credits, there is some conformity we will do there but the vast majority is still in place.

the young child tax credit, no one knows what we do with the itc. those commitments remain firm. the issues of jobs, i have talked a lot in this room on different occasions about regions rising together. the state's vision is bottom up, not just top-down. we defined broadly 13 economic regions. we talk about california's economy. just as one economy but the intersection of many different economies. when you are the size of 21 state populations combined, california, that is the way you need to look at economic development. we have done that. this commitment around this initiative. $600 million focused on our rural partners with unprecedented support. we are committed. to that. there is some deferral. we are stretching the money out but not denying the fundamental

commitments. i can put on this slide many other commitments. to under $50 million for the collaborative is going out but i will spare you that. i cannot spare you highlighting this partnership. i was down in los angeles. it was one hell of an event -- forget the language. i'm proud of it. no one does what we do with quantum. you will hear a lot about quantum computing. no one knows what california does. no one does what we do. know is doing what we are doing with immunotherapy. all of us have become experts on that because we know what mnra is after covid. we worked with google. they provided an unbelievable site. it is a former mall. when you get depressed and see a former mall -- my grandfather

was here -- come on. it is part of the transformation. . you see an old mall and say, what will happen? 700,000 square feet of the best and brightest minds in quantum and immunology around the globe. able to attract truly the world's leading talent. this is what we do best. because of you we were able to buy $200 million for this institute. the commitment from the state was $200 million. we are maintaining that. the philanthropy has come in in a big way. it is exciting and gives you real confidence in our future. i had to add it. i wanted to add a little highlight of what we announced yesterday. our team has been working a couple years on this.

i wanted more transparency and i think you deserved it. unprecedented infrastructure investments that are coming in the state in the next 10 years. not only because of our state's 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 1950's and 1960's, this is getting back to that. these are pat brown-era 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 one-time 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 one-time surpluses for one-time 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 one-time 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. i'm sure you all want to write about that so i will walk you through the details or they will walk you through the details. let's 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 long-term 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 long-term debt. we are maintaining that consciousness and focus. let's talk about the belt tightening. you might have seen a number of months back we said no new cars. no travel that is non-essential. 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 long-term unfunded liabilities. that is this year's 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, ready, fire, aim, it is ready, aim, fire -- i could keep going. [laughter] you will ask me a question and i will close on this. i will do my best with a lot of numbers. you have the lao that that it was this. we have written about it 150 times as if it was true. you may not say the latter part of that but you have written about it 150 times. editorials, everything. the wall street journal for the six time in a row talked about a wealth tax. it is like a broken clock.

the difference is, in three categories. one, we increased it by $3.4 billion. we have three categories of different numbers. $10 million difference in prop 98. $8 billion because of what came in and was realized and collected under the irs delay. $2 billion was adjusted in terms of her own projections. $10 billion there. we have $7.8 billion -- this is something finances privy to, not everyone else -- that is what we referred to in the language of accountants, work load reductions. savings, more efficiency in terms of government operations. we estimate $7.8 billion less

costs in that category. not then the lao because it is $4.5 billion less. and then the big one was the $15.3 billion on the revenue side. on that delta, let me say two things. we have a six-year budget framework, the lao finance. between the lao and finance, we are off over a six-year period by $2.5 billion which is extraordinary. we landed basically in the same place but we have a difference of opinion in the short run and not the long run. we are all in this together. i value their work.

we just are a little less pessimistic than they are about the next year. i do not live in a bubble. i live in reality. i have another making a case for this economy. other people are making a case 24/7. you have an e presidentx-yesterday who said he was hoping -- ex-president yesterday who said he was hoping for bad. i respect the honesty. there have been people talking down this economy. we are just a little more optimistic. all the naysayers. slightly more pessimistic. we do not assume a recession. they do not assume a recession but they see indices, the prospects that it could happen are more likely than we do. that if the difference on the revenue side in the short term.

they are a little more optimistic than we are on the back end. i hope they are right and we are wrong. that is the long-winded delta. i have a sly letter if you want to go through that one more time if you did not get all that done because i imagine that will be fundamentally a question, why the delta? i want to think my team. this has been a hard year. you can tune out on this. this is just for me and my team. i am trying to be charitable. you recall this time last year we were dealing with unprecedented flooding. i came in with a baseball hat and was heading to the central coast this time last year. little did we know that those

extreme weather patterns would lead to this extreme volatility in financial projections. we did not think through or even consider that the irs would delay taxes in 55 and 58 counties in california on multiple occasions. on one occasion, we read about it. wait a second, we have to pull this a budget together, and not just for the may revise. making a point around this uncertainty. it was also reflected, all of the vetoes that everyone loves to hate, where i said we cannot afford to do this. imagine if we had signed off on all of that. we are getting through that. hopefully we are on the others of that. this has been a very challenging experience for the team. because they just collected the

revenue -- just getting this to the printer, getting this presentation up was done in a very short period of time during the holidays. hats off to team finance for all their hard work. [applause] to those poor souls like jason elliott who get burdened putting the slide presentation together, anthony york who has been doing a magnificent job for us. are you supporting a wealth tax? no. why the hell do you keep writing about that? that was not just for the wall street journal editorial board. do you know how many calls i got about that? the damage they intentionally, knowingly do. i said it.

there will be extra editorials attacking me for saying that. they know because every year i say that. i think it is shameful. i think it is done very intentionally. it is not truth seekers, it is ideological warriors. i say this as a guy who loves the news side of the wall street journal but that editorial board is a broken clock. they do it over and over and over again to damage the state. i have too much pride and love for my state. i am sorry to state it so emphatically. i have done this long enough to know that when you do that you will pay a price. but the state has been paying a price for the misrepresentation and lies that are advanced every single day about this state and the health of the state. it resiliency, vibrancy,

entrepreneurial spirit. i am here as a future ex -governor who loves this damn state and everything it represents. do not think we are not transparent about those -- we are trying everything we can to address the issues. one of the issues that remains in this state is the constant and never-ending assault on our values and the things that i hold, and the vast majority of californians, hold dear. i will be more pointed and aggressive in making a case. some of the reporting around the last few weeks regarding this budget and presentation is done -- has done some harm. i hope that is considered. if that is your story, so be it. i hope the story is one of

resilience. it is also a story, enclosing as i begin, recognizes this is a story of correction and normalcy. and one that we in some respects anticipated, perhaps not. and one we are prepared to work through. thank also much for your time and attention. i think there are one or two people who might have some questions about this. [applause] >> good morning, governor. thank you for answering our questions. thank you for preemptively answering the question about the differences between your projection and that of the lao. do you have a specific proposal on reforming the reserve account? gov. newsom: i have broad strokes ideas.

10% is adequate. i expressed that last year and the prior year. we are hitting the cap, we would love to capture more. it led to a tax rebate, the largest in u.s. history. i do not read about that all the time. i will say it a second time. the last checks just went out last month. $18.1 billion. we created the reserves. the reserve construct was created after the limit was advanced. i think we have to modernize our thinking as it relates to that relationship. we have to reconcile the volatility of capital gains which will become more and more volatile on the nature of economics. it is important to capture more going forward. we have been in discussions last year. there was more of a focus.

ours is a clean prop 2 increase focus and everyone has ideas in between. i want to take a step back to the table on this and work together but with some humility. full transparency, we decided to do some survey work on this with the public. we have work to do. the public does not necessarily see that as, how will that advantage me? we have work to do on this specific proposal. a directional desire. >> you framed this budget as a normalization after a couple of very big revenue years. you're looking at delay for programs like climate and housing. do you think you over promised on some of those things? gov. newsom: absolutely not. unprecedented commitments on climate and it will grow with the support of the federal government.

i may have understated our capacity because you never could have imagined the kind of support coming from the federal government and the leverage from the private sector. that is a big part of it. i do not feel that is the case. again, on the housing side, reforms, we have a partnership with the legislature, unprecedented, $40 billion since 2019 in that space. that was a pace that broke all my expectations before i got here. >> thank you. >> good morning, governor. andrew from bloomberg industry group. regarding the minimum wage increase for health-care workers, the summary describes a trigger mechanism. i am curious if it is for expectation that that trigger would push the implementation or the higher minimum wage out entirely? gov. newsom: we made a

commitment with legislative leaders, stakeholders. we made that crystal clear. you are referring to 525. we continue to land that. you will see that language very shortly. -- and we are confident all parties that committed to that agreement are going to meet it and use so very shortly and you will see the fruits of that in terms of a legislative -- actual legislation and a matter of weeks hopefully. >> and how much were the savings and workload reductions the result of the recently imposed spending freeze? gov. newsom: weeks ago, that was weeks ago. reporter: but it's not like a firm expectation. >> no. one cannot overstate that side of the equation as it relates to those freezes and contracts, etc..

the bulk of it is represented in what we are proposing. >> thanks. reporter: hi, governor. ashley with kcra3. i know you mentioned your intention to tap into the rainy day fund and withdraw money which would require you to declare a budget -- state of emergency. essentially when do you intend or would you intend to declare that? gov. newsom: forward to the feedback and insight sort of ingenuity of members of the legislature. we'll be able to compare and contrast before i sign the budget in may probably. will just -- we will just make a determination of that time. reporter: i ask because in your

letter you know how last year you and state lawmakers crafted a budget blindfolded essentially without a lot of the information you needed to do so. so i know there's an appetite in the legislature to potentially open up last year's budget with some tweaks and changes and i didn't know if that rainy day -- gov. newsom: we've got $7.8 billion in terms of the work will reductions already represented. there's nothing that stops legislature from moving tomorrow. they are legislation. people want to move to midyear cuts. let's have a conversation. i'm just one member of this team. we put this presentation out with humility and grace respect and admiration for the partnership we've had with them over the years. the work we've done to build up this resiliency and these unprecedented reserves and cash status bond rating included. i think it would be a positive thing to move.

we have nine if you want to know -- you didn't ask but i'll offer i have nine early action items that we will be asking the legislature to work on. they don't total the entire budget but they're just early actions we want to move. that's indicative of a desire to move. reporter: you've been clear about how you feel about the wealth tax. are you committed to not raising any taxes to close this gap? gov. newsom: i don't know how many times i have to say it. i'm not going to say it every single year. it's infuriating because i guess everybody needs the same story and regurgitate the same story. maybe you guys have some advice for me. honestly. so no is the answer. reporter: thank you. gov. newsom: thanks. >> hi, governor, sophia bolag

from the san francisco chronicle -- in light of this project a deficit and given this is an election year, are you concerned at all about the potential of state and local ballot measures to sort of put further strain on the state budget this year? gov. newsom: are you referring to that one big one? reporter: any that potentially come up this year. gov. newsom: look, why don't we deal with those as they come up? hard to sort of speculate on what's out, what could possibly be presented. there is limitlessness to that. it's like one member of a legislature has an idea and then people say the state of california is moving in that direction. a lot of local folks have ideas. i have to review those and consider them. i am for flexibility, accountability for some constraints of course, common sense, fiscal discipline. so, that would be the parameters

to which i would be or at least the lengths to which i would view and consider whatever those proposals are. reporter: you mentioned the the legislative side of things. i noticed in your budget proposal there is a section of savings legislative requests. are those bills that you signed into law last year that you're not planning to fund? gov. newsom: they include things that we put in as well. we have to work through that. the bills that i signed that had new fiscal costs, i think it's in all of our interest to review them on the basis of the short ball -- the shortfall and make a determination together. that's the way we've advanced. we took a portion of that as it relates to the members' requests. other things that we had championed as well in concert

with the legislature and we want to put that back up on the table under these circumstances and make an assessment of, is this more importantnow than this? was what the governor proposed in january, do we really want to see that happen? i'd love to see those compacts advance all these things. i'd love to get those off the table. but what's more important? that's part of the sausage making. that is for me the most exciting time of the year. budget. i'm looking forward to constructive dialogue with the legislature on all this. reporter: thanks. >> hi, governor, lindsay holden from the sacramento b. can you be a little more specific about early legislative action? what are you looking for, are there authors, what have your conversations been like? gov. newsom: we can have a a

sidebar with the ledge to talk a little bit more. but again full transparency there are nine specific actions. it may change. but nine that i've signed off on at least today. where we have begun the process. you want one interesting specific? you may want to run with this. you may not. it may be so dull you don't even want to ask a follow-up. there is one for 22.1 million dollars for fruit fly containment. i just thought some of you old enough would get interested in that. others are going to look up what is a fruit fly. that's one action that is important based on a little history. there other actions that are in there. so you get a sense. that's a more modest one and there's some more significant one. the legislature wants to move more quickly on all of this. i'm ready. we want to hit

the ground running. we do this monday through monday. ready to work with them through all this and hopefully we calmed a little bit of the nerves on the magnitude of this. but there's still some tough stuff in here that we will have to attend to and i'm happy to do it sooner than later but i'm going to respect our calendar. it's their right, privilege, their prerogative. again we've just had such a great relationship the last five years. i couldn't be more proud of that working relationship. i want to maintain it with the new speaker and protem two people i've worked with for years that i have deep admiration for. i look forward to the opportunity to dialogue on this. reporter: it looks like you retained funding for the next round. but can you talk about the future of that program and also maybe be a little more specific about the account

ability you are seeking? is this the second year you have discussed that? gov. newsom: we are not cutting the existing commitment. we are in the middle of fiscal year. we are doing what we did last year. i referenced it in the context of the presentation. we didn't include it in january and the new fiscal because we want to address the parameters of that accountability engagement. i want to continue to see more accountability as it relates to advancing. so we have made it clear to the legislature that we want to seek more in that space, more collaborative spirit, more accountability and more engagement and more focus want to work with them between now and may to determine where we land in terms of ongoing support. i don't want to burden too many folks, but let me just give you a 45 second -- as you may recall a couple years ago i rejected the plans that came under the hap framework,

which had six fundamental requirements, six performance measures, and they just weren't ambitious enough. we had a big meeting down the road here seemed like a hundred folks showed up. they were not all happy. they came back with new plans and more ambition. there is still some issues in terms of what i think they need to focus on. i think we need to focus on the encampments. i want to see these encampments cleaned up. and i'm not seeing it as aggressively as i want to see it. that's just one area. for me, around accountability and focus. i want more focus, i want more intentionality. so i want to work with them and big 13 mayors, they know my position. the cac's, the counties and some county and city stress that needs to be worked through.

put the mental health services act reforms to the people. it included a requirement that's along the lines of accountability. i want to see which is one simple plan for all funding streams for mental health. i think that's a parameter of framework that i also would look to seek as it relates to the homeless issue. and finally in the housing and account ability unit. my old city, san francisco or huntington beach, el grove, i want to drive that kind of energy and accountability on homelessness as well. >> thank you. >> angela hart. a true thank you for your patience while i get through this question. it's kind of a mouthful. gov. newsom: should i sit down? [laughter] reporter: truly thank you. we can go get lunch and have an interview if you would like. your budget continues the funding for homelessness and the

and met resolution grants. this is a lot of money and the money in part is funding these outreach efforts to go into these encampments to help people get an id, get medication and collect the things to be so-called housing ready and then the sweeps come in and some of the sweeps are being funded by efforts at the state's -- that the state's funding. and often there's nowhere to go. that's true regardless if the state wants to acknowledge it or not. and then the outreach workers that are in some ways being paid by some of the money in the budget are going back out to redo that work. they're going back out to hunt for people to help them again. get their medication which was thrown away by the previous sweep, they're helping them again go to the dmv and an -- and get an id. you see where i'm going. is this helpful, governor? is this an appropriate use of taxpayer money, is it wasteful spending to sweep people and put money into the crisis?

gov. newsom: i've been doing this a long time. i've been out on the streets, you know that intimately. personally, i've seen this movie many times before. and i'm deeply mindful of the expression of concern that you've highlighted and the realities, at times. but no, what we are doing is i think very thoughtful. the entire encampment resolution grant program -- the reason we call it resolution grant is to address many of those concerns. because the old paradigm, the old binary was just sweep everybody off the streets. no place to go, no consideration. this requires the grant process -- i don't know if you have seen these grants -- requires consideration of the individuals and their well-being before we advance and initiate the resolution, the cleanup.

that's the state component. there are a lot of local folks out there. we could discuss some of those efforts. but if i may, you just made -- i think this is really important -- an incredibly important point. that is there's not enough beds. so you suggested in the question whether we acknowledge it or not -- i don't know who is not acknowledging it. i want to be crystal clear. there are not enough beds, that's why i'm out there promoting an effort to provide 11,150 new beds, treatment beds and have 27,000 additional outpatient beds. that's why we have billions of dollars we want to invest in the space. so i think you just made the best case for the case i am making outside of this formal presentation to advance that vision of reforms so we can

address that criteria of consideration and critique that you wisely and appropriately highlighted. reporter: linda cal aim -- reporter: when the cal aim funding is going to those outreach efforts, the encampment resolution, and the broader scope, is this wasteful spending? gov. newsom: helping people get off the streets? no. investing in their well-being? no. helping people from the ravages of drug and alcohol addiction? no. reconciling the fact that there is no compassion in people living in encampments out on the streets and sidewalks? absolutely not. that's my response. thank you >> -- >> thank you. [applause] my second question, with the health care minimum wage, the 525, the budget does not include

funding for that. i'm curious if you worry that opening up negotiations again will potentially impact or unravel the rare deal between industry and labor, and in retrospect, do you wish you would have put in the trigger cuts last year so you would not be in this political tornado? gov. newsom: we can rewind a little bit of my response a moment ago which is a repeated component of it. we made a commitment with everybody. we are advancing the discussions around following up on that commitment and that's where we are. reporter: do you regret not putting those trigger cuts in there? gov. newsom: we made a commitment before i signed it. so no. reporter: marisa lagos. last night or yesterday you put out a framework for tackling

retail theft. wonder if you can talk a little bit about how you hope to work with the legislature and why nothing in there -- it doesn't touch prop 47 which would obviously trigger going back to voters. gov. newsom: let me take advantage of this. [laughter] it's kind of like a wealth tax for me. if we could put up a slide here -- there we are. this is just not something you will report all the time. everybody talks about prop 47. they say, they lowered the threshold. i see this 24/7 surroundsound on all these news -- including that same editorial board with a broken clock. they are saying, they lowered the threshold. so that's the issue. and we say, that's interesting. so that begs the question, where are we? if california has the highest threshold. it must be the highest, because

remember the $950 you have to steel -- under prop 40 it says it's no longer a felony and it becomes a misdemeanor unless you still upwards of $950 of goods. so people get frustrated and say, you have got freebies. it is free to steal $950 and no one ever gets charged. no one ever gets arrested. and so california did that to itself by lowering the threshold to $950. and they say that's it's one of the weakest laws in america, you can google it. you can see it everywhere. it's just interesting. turns out in texas, you have to still upwards of $2500 before it's a felony. sounds like california is a little tougher than texas. then you say, are we below them? then you've got this next date, -- this next state, colorado at $2000. connecticut, pennsylvania. you're thinking california has

got to be right here. or here. wait a second. based on all the rhetoric and the hearings and outrage, everything gets repeated on the doom loop, maine, hold on, wait a second, how can this be? you're saying remember the lower it is, the tougher it is. i don't know if you guys have a fast thing here. there's california. 10th toughest in the united states. and don't take my word for it -- this thing has been solidified and everything else. it's 11th within the margin. so it's not that. but it seems like we have just created this narrative. and i have to repeat this all the time because the vast majority of people just go, that can't be true. because i read about it being differently. everyone i know is rushing to reform prop 47 to raise the threshold. okay, that's not the

fundamental issue. the issue is the other issues that are not 47 related and thank you for the question, the things we advance yesterday and working with the legislature on, and that is the nature of retail theft has changed. it's not just the onesie twosies, yes that's an issue. i don't deny that. but it's also become deeply organized. and that's what we need to go after. and that's a whole different thing. they blow through the $2500. that's where we need to capture new laws and they knew framework and also the issue of auto burglary, it went up 24% nationwide. we are up at about 4% based upon the preliminary data that came in. we are doing a little better but we are not satisfied. some cities are doing a lot worse. so we got to deal with the auto theft side of it as well. and then clarify some of the jurisdictions. some people say i can't do anything unless i see the person being arrested. that is not the case.

we need to clarify that. and so there's some also clarification language we want to include in the package. i said this years ago and someone said you've got to reform 47, i said i'm open argument interested in evidence. i'm not an ideologue on this. and remember i'm the only guy that can say that, i'm the only guy that has reformed prop 47. i did a ballot initiative as it relates to the gun threshold and made that threshold a felony under $1,000 for possession of a legal gun. so i've reformed it, only one with credibility on that basis at least. and i believe we need to do more and put hundreds of millions of dollars up. a lot of these same people criticizing us voted against those new dollars being invested which i would love to see from an accountability chart one of these days. or again not even asking for the grants to help with the prosecution and are just using this as an excuse. but i'm not sure they are even aware of these facts. so forgive me for being

long-winded or even showing 28 slides just to get to the red line there. but it's important to level set with people. and that's again not to say everything about 47's hunky dory and perfect. and we want to help fix some of the ambiguities there. but we can do it without reforming or going back to the voters itself. that's what we proposed yesterday. >> education funding is staying pretty flat. a lot of districts though are facing declining enrollment and other structural challenges. can just talk a little bit about how you see this budget impacting students on the ground and around the state? gov. newsom: the macroeconomics will impact prop 98 and there is question about it. under the prop 98 threshold, it's an eight dollars difference. but overall it's a significant shift.

with unprecedented abundance in our state's history, you have seen for the purposes of going back to the education slide, there was a slide -- maybe you guys can pull it up -- the second education slide after the bars. you could look where we were a decade ago. and we've significantly increased. and the pressures again were still there. it begs the question of the model itself. you see 12 years ago it was 8,700 versus 177,000, just puts it in perspective, the significant increase. so yes, i'm deeply mindful of that and deeply mindful of the stress and wage pressures, bargaining units. legitimate. we need to invest more in our teachers. i got it. not just teachers.

our support staff. classified employees. we're having a difficult time retaining them. some of the investments that we are making in this space is keeping those dollars to support a professional development like teachers and particularly higher need categories like special ed which is so critical. and esl and and underperforming districts. it's the right question. is very much top of mine. it will only be exacerbated by the last few budgets. reporter: good morning. gov. newsom: or afternoon. i don't know where we are. [laughter] reporter: this is antonio harvey from california black media. in regards to -- there were some

activities going on around the state capitol, concerning california legislative black caucus member isaac bryan, urging that the state focus is limited to support public sector criminal justice and more as the state focus nearly on this $68 billion shortfall. what are some of your steps your administration is taking to make sure critical investment into these areas and communities that need the most are not cut? gov. newsom: i appreciate it. $37.9 billion. not $68 billion. the way i set out this presentation was to answer that question. we frontloaded a very detailed response to that question.

prioritizing community schools, prioritizing our investments in learning loss and mitigation. as it relates to equity grants and community building uh the investments we're making in regional economic development. workforce development. fundamentally inventing in the community. not making cuts modest, but not significant cuts to the vast majority of those programs. that's what we've done. i think that would be the best way i can respond to their correct call to maintain those investments. and to invest in people as we struggle to balance the budget. reporter: thank you. in regards to punditry and imperfections surrounding reparations, i am understanding senator stephen bradford introduced legislation last fall back in august i believe, the california american freeman

affairs agency, senate bill 490. i just want your thoughts about, was there any allocation -- funding allocations for the department of justice in regards to keeping that process going? and have you read the final report? gov. newsom: i have not read it. i have devoured it. i have analyzed it and stress tested it against the things we've done, things we are doing. things we would like to do but can't do because of constitutional constraints. and i've been working closely with the black caucus and i really can't stress how good of a working relationship we have. lori wilson and others, she's been just magnificent. we continue to work through this. they asked me, like caucus -- black caucus, they had three priorities in the budget, don't cut, they mentioned three of

them, the equity multiplier, the bunche center, ucla being another one. we are mindful of that report. we are deeply mindful of what will come next in partnership with the caucus and the work continues in that space. reporter: i might add right now, the state of new york, they have put together a preparation task force and they hit the ground running. i would think that you're mindful of that, too, correct? gov. newsom: kathy hochul reached out to me on this. they are just starting the process. we just ended the first phase of the process. we are entering the second phase of the process. and as i said, working collaboratively. i don't want to get over my skis on here because of the partnership we're forming with a black caucus in the space to take the next steps based upon

the recommendations of the report. reporter: thank you. reporter: good afternoon, governor. travis gilmore with the epoque times. considering that the deficit is related to misses in personal income and corporate tax revenues, what role did the loss of businesses and residents over the last few years planned the situation? gov. newsom: i don't know that it's played out. i think it is on page -- if i'm right, someone should give me lunch. page 149. i think there is the demographic page in the budget. i'm just curious if that is right. [laughter] that lays out how it's significantly tempered. it is right. ok. someone get me lunch. like a chicken salad. [laughter] between july 2022 and july 2023, 0.1%. over 18 states, a lot of red states, report often about it as

well as other states that have seen some modest declines. california, significantly moderating. so, no, i don't think it's played an outsized role at all. reporter: what can the state do to reinvigorate or convince businesses to come back to the state? those that have left and also the census bureau shows that while the state -- while the population decline has been mitigated by births and migrations from international sources, the outflow shows higher education and therefore higher income, leaving the state in a higher number that are -- than are coming and. what can we do to reverse the trend? gov. newsom: i think you has are familiar. you have been around a long time. this is a story written every 10 years in california. 1994 time magazine, "end of california," same arguments. california is the temple to the

american economy in terms of job creation, innovation, entrepreneurial spirit. i gave you a demonstrable example of that of the work we are doing in research and development, pushing out the boundaries of discovery. that is the reason elon musk had to come back, could not get enough of the top engineers in the country, had to come back to silicon valley. no one comes close. 35 of the top 50 companies in the world are in california. san francisco has seen dramatic investments in growth in that space. nobel laureates, engineers, more than any other state in america. one of the top growing economies. i just, with respect, that narrative. that is just folks painting you a picture and coloring it in because they are just focusing on one side of the ledger and i could not be more proud of the resiliency of this state and how many new taxpayers -- take a look at finance. this would be a great article. take a look at finance.

stress test it. and number of people earning over $50 million in this state, record-breaking. the last three years, more than the last 10 years combined. the number of new millionaires, unprecedented in state history. just the last few years. we are one of these states, a conveyor belt for talent. when someone decides to move out of the home, um, we have 15 new opportunities for people to come in and get the benefits of our partnerships and our support, you sees -- uc's, csu's. we are the greatest wealth creator in the world, california, and we continue to dominate in that space. you will see that on the basis of tax receipts and i just think it tells a very different story than the story of three years

ago because elon decided to get his capital gains deferred in texas. >> thank you. >> good afternoon, governor. the federal government has signaled that they would be hesitant to approve such a large tax again and may only approve smaller taxes in the future when the state renews. i know that in the budget summary that there's going to be and ask for the legislature to ask for an early increase and i was wondering sort of the confidence that the fed will approve that and if they don't, how would that 1.5 billion dollars difference potentially impact that? gov. newsom: we have been negotiating for a year plus with all the stakeholders and partners. i'm confident we will be able to move that forward. >> are there any concerns about if the feds don't approve it that it would impact that account? gov. newsom: as you may know, we

have a pretty good working relationship with the federal government. i am not concerned about that. >> it also sounds like, to follow up with a couple of my colleagues questions, it sounds like there potentially is not language yet for the health care worker minimum wage bill. gov. newsom: once we get that done, you are going to get it, and then yes, so don't -- don't worry. as soon as we have it, we are working on the details. we will get it to you. reporter: thank you. gov. newsom: thank you. reporter: good morning, mr. governor. thanks for taking the time. the first question for you has to do with just between now and may, about three months and three weeks until may 1 so my question for you is in the sense of between now and then, what are you most optimistic about, most helpful about in terms of this budget and what are you most concerned about and could those concerns be that the

deficit will actually grow between now and then? gov. newsom: a few weeks ago, we are clarity on where we stand because of those delays so that is number one. we have a much better sense of where we are. also, i am pleased how the year ended with nasdaq, smp, and the markets more broadly. just double digit, 30% in some case increases. that is directionally to the benefit of this state going forward so that is very encouraging. i am encouraged by the resiliency of the american economy, resiliency that is demonstrable not just in terms of job numbers including those that came out last month but in terms of inflation and how we are seeing significant declines of over two thirds of inflation and how it is very likely we are going to see the fed move on interest rates which will have a disproportionate benefit to housing in the state of

california and the economy particularly here in the state of california going into this calendar year so directionally, i have optimism but i am not naive about some of the headwinds either. and that is why we will be cautious and maintained that caution. i am not looking for a dramatic -- and this may be the most succinct answer to your question -- i am not looking -- at least, we are not projecting a dramatic swing between now and may. i am not expecting it. you have seen that in the past but we don't necessarily see that happening. there will be significant shifts as we assess where we are that i don't think in the totality, it will be profound as it has been in the past. >> i know you already addressed prop 47 and i won't make you go through that again. gov. newsom: how many states? [laughter] reporter: just from our station

down in the bay area, just a question from them in the sense of a follow-up in terms of what -- just some of the main goals that you do hope to achieve with your property crime proposal just for the everyday california -- gov. newsom: i want people to know that this is unacceptable, period, full stop. folks need to be held to account. there is nothing good or right about this, period. this is a small business person. the vulnerability, the sense of loss is not just the monetary -- it's a feeling. it is unacceptable. i am not condoning it. i don't explain it away. quite the contrary. it was down in long beach and the east bay, announcing efforts to go after this and to start to focus on this and i am pleased now. they are doing a very good job,

moreover stay in the legislature and i welcome that. that is a very positive development and we have good working relationships. cuba has been a real partner in this space. i want folks to know that we hear them. we are listening to them. we have got a lot but we have more to do as the nature of this continues to evolve. we need to evolve in terms of our approach and risk assessments. >> this is adam with the associated press. governor, what is your reaction to the san quentin advisory council's report and are you proposing any changes to your proposal? gov. newsom: i am so proud of them. darrell steinberg knocked it out of the park. they did such a magnificent job. i had a real detailed briefing a few weeks ago just -- i was really humbled by it. they took the tart cherry seriously and they got creative,

found a lot of savings which was fantastic, new ideas and it's exactly why we formed a committee so i'm really excited and encouraged about taking it to the next level and moving it forward so in the next number of weeks, maybe a month or two, we will be talking a lot more about this, all about the california way, reforming our criminal justice system. we may see it in the budget and we have two more changes coming at the ccc, march this year, march of next year. if i get this right, i want extra chicken on my salad. we are projecting going down to 94,222 prisoners. it provides a lot of opportunity. it was 160, 1 hundred 70,000 so a lot more flex ability, a lot more opportunity, not just in san quentin. i see san quentin as a catalyst for reforms across the system.

you want to get tough on crime, let's deal with the fact that the vast majority of folks are back out on the streets and sidewalks and many of them recommitting crime. i want them to come back reformed, constructive citizens. we have the opportunity to do that, particularly at san quentin. i was really overwhelmed by the work they did in that report and a lot of great ideas and we will pursue many of them, not all of them. reporter: governor, you spoke about your vetoes at the end of session. if you knew the deficit was coming, you certainly did, why did you choose to sign that minimum wage increase? gov. newsom: because we had a commitment on the trigger. there is your answer. reporter: i am from the los angeles times. you suggested changing the limit before and it did not go anywhere so -- gov. newsom: prop two. that is legislature. i have been focused on a 10% cap

and i wanted to make that crystal clear. to the extent we can have a dialogue, i did not want to close the door. my focus has been on capturing more rain in the bucket. reporter: how do you plan to approach that differently this year? are you going to own that? are you going to expend political capital on it? gov. newsom: i have a big priority in march. i'm putting everything i got into getting march done so i'm not going to do the punditry thing on political capital and try to set things up. i was very transparent with you, with all of you, by saying we did a little survey on this and got tons of work to do. this is a multi-year -- well, i don't know. i like to think it is multi-month. it is a process of creating the conditions where we can successfully reform this but i'm just saying directly, it needs to be reformed. there's a lot of means so i have got to prioritize and focus on the controllables, what i can

control and influence. i was surprised when the survey came back where we start. it was a lot more challenging or is a lot more challenging than i originally believed. and there's just not a lot of people who say i would love to support increasing your rainy day reserve. let's go raise money to do that. you get the point. he got a lot of ballot initiatives on. i'm having a real honest conversation with you in a very public and open way. it needs to happen. i want to help support that process. i want to reengage the legislature and that is why i'm saying it today and i'm grateful you asked the question. it allows me to say more. i don't want to oversell our capacity to create the conditions in the short run to get this done even though it needs to get done. reporter: when you said focus on marge, you mean prop one -- march, you mean prop one? gov. newsom: i can't discuss any particular one. reporter: to clarify in the

health care and minimum-wage trigger that you're seeking, are you trying to implement that trigger this year so it would delay the funding until future years out? gov. newsom: this is the third or fourth time we have discussed this. this is not to diminish your inquiry. you will see what we committed to. and it will be clear what we committed to together before we sign the bill and we are working through the details of that and we are going to present it to you very shortly and it will be, you know, it will answer it self. thanks. i appreciate it. reporter: blake jones with politico. i'm wondering how big should the school bond be? gov. newsom: i appreciate this. you are going to hate my response.

but it's honest. working with the legislature on rightsizing it, it's very important to move forward with it, so that is number one. i absolutely support this effort. the question you have reported, you would know, do you include higher education or do you not? does that impact the threshold of support? what does the coalition look like if that changes? what is the right size on the appetite of the voters? what happens with that initiative whose number i can't say, and how does that impact your overall bond capacity? what other bonds are being considered? all of that is being worked on in real time but it is a real issue to address the fact that we have exhausted the previous bond and it is important to advance a new one. reporter: have you done any polling on how universities change that threshold? gov. newsom: yes.

reporter: so? gov. newsom: i will ask the stakeholders if they want to share it with you. i am not privy, not privileged to do that without their indulgence, but yes. there was an effort in the past on this. ironically, prop 13, and it included higher education. it was a march ballot so a little different so everybody has an historic mindset around that and that is all being considered in terms of reviewing where we might land. reporter: on the prop 98 budget, i know you all are projecting a reduction of 11.2 billion dollars in a guarantee over three years. i'm wondering more specifically how you propose to go about reductions of that $11.2 billion. is any of that going to be in deferrals or is there anymore you can say? gov. newsom: this is absolutely -- i know there are other

questions. i will take all the questions, but joe and his team and their folks, let's walk through that. stick around and they can walk through the details of that, which you deserve. reporter: sorry, just one more thing. you know, you said you don't want to embrace any new taxes consistently and you talked about the difficulty of changing prop two or the limit. is there any chance throughout the rest of your second term that you pursue solutions that would decrease the states tax volatility that you have often described as a problem? gov. newsom: i think this is the third or the fifth budget presentation where i bring up bob's name. what she always appreciates. bob, if you are watching. -- which he always appreciates. bob, if you are watching. [laughter] we are addressing volatility, looking at the current tax structure, low income tax brackets, expanding service sector along the lines of most

ever states that other states to decrease the volatility. did not have a lot of support in the legislature or with the public. you have to be mindful of both of those things. it is the art of what is possible. i don't think -- you can argue -- i have had great debates. she would engage in -- she certainly engaged me on them. there's two trains of thought. you have states like texas, florida, the two most regressive states in america, meaning they tax low income workers more than we tax the highest income workers. it is just a value popular -- proposition. who do you care for? who do you promote? who do you champion? we are a progressive state in that respect, not a regressive state. part of that is volatility. the benefit, if you can capture that resource, i think is self-evident. that is why i think a prop two

approaches a better approach right now, a more pragmatic approach and one that would pay big dividends. so that is the approach i prefer at this stage, particularly at this stage of my tenure as governor since i have a sell by date in a few years. let's see if we can create the conditions to at least achieve that and that would substantially aid the people of this state going forward. reporter: thanks. thanks. reporter: hi, governor. you mentioned that accountability is the narrative or the theme of this year and you said before how you are going to continue to hold local governments accountable for homelessness spending, so what is your reaction to more money being poured in and we are just not seeing homelessness rates decline at that level that we all want to? gov. newsom: my reaction is the frame of your question. i want to see accountability. better outcomes and that is why

we acquired the first account ability plans in california history. when i got here, there was no plans for homelessness, no investments, no strategies. i will remind you, the highest count did not happen the last couple years. it happened in the 2000, 2005 was the highest at 188,000 folks. there was no plans, no strategies, no investments, of meaning, that has been marginal. that changed five years ago. three years ago, my mindset changed even after the first two years that we need to be more focused on accountability and that is why the framework came and that is the accountability we are seeing in housing now. we are seeing the accountability in the mental health service act reform and we are now starting to talk and socialize more accountability, to your question, in the homelessness space and that is why i advanced not only the slide but my narrative around working with the legislature between now and

may to be more prescriptive in terms of that accountability before we put any additional resources. reporter: governor, how would you best describe his government? would you say we are in a financial crisis? gov. newsom: i mean, i don't know the word crisis. i mean, we are able to balance the budget. you saw the presentation. you saw all the things we are able to commit. he saw the reserves. i told you about our cash balance and unprecedented repairs. we are still paying long-term obligations, talk about the fact that we did 93% of that surplus to prepare for just this kind of scenario. we are managing it. look, i have been -- i think when we had 177 -- i remember people calling -- it is a crisis. we had a $100 billion surplus so you will find people that say -- i get it.

it's not my first, you know, -- i have been on planet earth half a century plus, so i get it. we are prepared for this. we are managing it. i hope i am coming across as not a hair on fire governor. we will get through it. reporter: your message to the average californian who is not going to go through all the documents that we are going to go through, what is your message to them about this budget if they were to just watch you for a few seconds? gov. newsom: i hope they appreciate that close to $20 billion in tax rebates last year, they appreciate the expansion of childcare and health care and the earned income child tax credit, the work we are doing, create a brand-new grade, pre-k for all, child savings accounts for their kids, and the work we are doing to offset the burdens of food insecurity by being the first state in the west to provide universal meals, maintaining those investments, the housework we are doing, the work we are doing to clean up the air and

the water, i hope we are -- they are proud of that. we are leading the nation in green carbon growth and we are one of the most dynamic and diverse economies on planet earth. i hope they are proud of that. i know i am proud of this state. they are right to be concerned about affordability. we agree with that and that is why we are doing a lot of things not to subsidize costs but to reduce costs, creating our own naloxone, insulin, looking at novel strategies to reduce health care costs, affordability, the work we are doing across the spectrum. i hope they see that we have them in mind and we care about them wherever they are. real californians, unprecedented investments in real california over the last few years. and i just hope they know they matter and we care. doesn't matter if they vote for, you know, former ex-president to be there next president or the current one. they matter. we care. that is my message to all californians and we are doing our best and i know they are working hard and they are doing

their best and i just want to thank all of them for what they have suffered through the last many years with the global pandemic, social unrest, a lot of anxiety in our politics, a lot of manipulation, misinformation, disinformation, a lot of partisanship. it's hard. and so i also want to acknowledge that and thank them for being as resilient as they are. reporter: and with that, every outlet in the room has gotten at least one question. gov. newsom: you are going to ask me a question and it's going to be for a raise. we cannot afford it. reporter: go and your chicken salad. gov. newsom: i think i earned my chicken salad which apparently i get. let me again just thank you, everybody. that me and as i always do, and if i haven't, i think i have, but i want to reinforce my deep admiration and respect for the legislature and the work they have to do over the course of the next few months.

i want them to know clearly that i am mindful that while we share the vast majority of values, they may have their own ideas and their own insight, and i deeply, deeply respect that, and i look forward to engaging them and working with them and reconciling those points of views, not differences, points of views, as we move forward with this. it appears at the moment that we will be able to do so with clarity and understanding that we did not have last year, and so, this gives me a little more solace and confidence in this year's budget process and again, i cannot wait to work with the new pro tem, mcguire, old friend, and the speaker, who are just outstanding young leaders and are going to do a wonderful job in partnership with us this year. take you all very much. now joe and his team will, up

and answer question -- will come up and answer questions. >> tonight and all this week, we will show some cases that the court has until the end of the term to rule on and we will talk to reporters about some of the legal issues involved. they will air each night at 9:30 eastern on c-span. here is a look at the schedule. tonight, we will begin with two cases that could result in the weakening of federal asian seas rulemaking process and their ability to interpret and implement law. on tuesday, the oral argument. the case challenges the constitutionality of a provision of a trump era 2017 corporate tax law. on wednesday, the court looks at the legality of the 2018 ban on bump stocks which modify firearms. on thursday, another second amendment case on whether people under domestic violence protective orders can legally own firearms. on friday, two cases on social media content and the state's ability to regulate content.

watch the supreme court oral arguments on this week, beginning tonight at 9:30 eastern on c-span and you can also find all of our supreme court coverage on our website, c-an.org. tuesday, 20 24 republican presidential candidate donald trump speaks to voters in green bay, wisconsin. watch live coverage starting at 6:00 p.m. eastern on c-span, c-span now, our free mobile video app, or online at c-span.org. >> c-span has your unfiltered view of government. we are funded by these television companies and more including mediacom. >> at mediacom, we believe whether we live here or here or way out in the middle of anywhere, you should have access to fast, reliable internet. >> mediacom supports c-span as a public service along with