Republican state senator says Gov. Newsom’s proposal won’t leave California with a “clean budget”

Senator Roger Nillo, thank you so much for making time for us. Thanks for having me here. So with the governor this week rolling out his final proposed state spending plan, he’s saying that he’s going to leave the state in good financial footing for at least the next 2 years. What’s your response to that? He even had the audacity to compare it to what Governor Brown left him, which was *** surplus. And all internal debt paid off. The problem is the budget is nominally balanced for the next 2 years. I say nominally because revenue is so volatile and with the stock market the way it is, the risks are high that we could experience difficulties in just the next 10 months perhaps. I’m not *** predictor, but this stock market looks *** lot like the dot com bust or just before that. Of 25 years ago. Um, and while he says he’s he’s leaving *** balanced budget, there’s that problem, but also there’s $30 billion over $30 billion in internal borrowing. And, you know, when we get to 2028, which is when the next governor will have just been in his, in office for *** year and *** half, we see over $10 billion in structural deficits rearrising. That’s not what I would say is leaving *** clean budget. Since Governor Newsom took office, we’ve heard this from the state comptroller. We’ve heard it from the legislative analyst. California has been spending more money than it’s bringing in. Does that fall squarely on the governor? Is it the legislature’s fault? Like, who, who is responsible for this confusing, quite frankly, money situation that we’re in right now? Let me quote something from the ledge analyst report of *** couple of weeks ago. They said in hindsight, underlying costs and discretionary choices were not affordable. In retrospect, the state could not afford to sustain its existing services while funding the chosen suite of spending expansions and new spending. In other words, the structural deficit was predetermined. And if they didn’t know that they were taking on spending that they couldn’t afford, then they weren’t paying attention to all aspects of the budget, and that’s the responsibility of both the governor as well as the Democratic Party, which of course essentially they control the budget. I know you spoke about this earlier this week. California overall this total spending plan is the largest ever in the state’s history. And as is revenue and and revenue and so in terms of that. There is *** hesitancy to cut programs. Why, why do you think it is that your colleagues on the other side of the aisle are, are hesitant to do that? Well, excuse me, once you establish *** program, you establish *** constituency, and it’s very difficult to cut back established programs because of that. And, uh, now when you say, uh, archive on the other side of the aisle, do you mean, oh no, no, no, I mean, I mean, the Democratic leaders exactly. It’s because, um, the spending that’s established um. Essentially is in their interest and constituencies of theirs, and you create an entitled constituency when you create *** program. So if you do try to cut it back because you can’t afford it, you’re going to receive *** lot of grief, which they are. And I mean, does this, this environment that they’re potentially setting up, I mean, is it putting the next governor, whoever that may be. In *** tough spot in *** different position than Governor Gavin Newsom came in when he became governor, completely different spot because that governor. As well as the legislature will change over probably quite *** bit because we’re at the end of *** session now and term limits at the end of every session, *** lot of members are turned out and you have *** lot of new members coming in, *** lot of whom don’t really truly understand the budget, and nor have they ever been involved in one as difficult as this is. And just *** year and *** half after they enter office, the new governor and the new legislators. We’re looking at over $10 billion structural deficits all over again. So I, I would say that is not *** particularly shining legacy. And one thing that the governor acknowledged was something that he did want to try to sort out before he leaves office is this debt the state owes to the federal government from pandemic-related unemployment insurance. California put nothing toward the principal of that $20 billion loan. And so now businesses, no matter how many employees they have, no matter what kind of employees they have, they’re paying more and more every year on their payroll taxes to shoulder this uh just the what, what is your understanding? Why hasn’t the legislature wanted to to figure that out or put anything down? Well, um. Everybody in the legislature says that they care about business, especially small business. But I always say don’t pay attention to the words, pay attention to the actions of the same people that say that they are very concerned about small business. We’ll also propose legislation that puts additional burdens on small businesses or any businesses, but this unemployment insurance thing is particularly pointed. And um, There’s no sense in crying over spilled milk, but you can learn how to not spill it in the future, and this is one of them. Significant surpluses that we had in 2020, 2021, 2022. If we’d have put away enough reserves to have spending be more of an average based upon what it had been *** few years before that. We would have put away significantly more reserves and we would have had the money to pay off the unemployment insurance. Now we have this problem of the mismatch of revenues and expenses and to pay off that unemployment insurance debt is *** truly daunting task. The point is we could have done it and maybe when we go through this again we can learn those lessons, but I don’t hear anybody saying other than my Republican colleagues and myself saying that we are putting *** burden on the organizations that provide employment for the growth of our economy and for people to earn money and to create wealth. And not only that, we’re also looking at taxing them additionally. There’s two proposals in the assembly that. Have not been passed at this point and I hope they don’t, but one that will tax earnings that are earned outside of California and another one that will that will impose taxes on certain targeted businesses to supplement medical expenses. These are employers. And with regard to that latter measure, it’s largely, I suspect part-time employees that businesses hire and might have to call upon Me. I don’t know to what extent that is the case. I’d like to see the numbers. I think it might not be as significant as they think, but if I’m right about mostly part-time, we’ll probably see *** cutback in part-time workers and an increase in unemployment. Uh, on that note, I, I think we’ve seen Democrats blame President Donald Trump for especially the this health care expense hold that the state has. What’s your response to that? Well, California’s problems are California’s problems. The fundamental problem that we have is the structural deficit. That existed long before Donald Trump even ran again for president, let alone was elected. So, um, let’s clean up our own house. Senator Neillo, that’s all I have. Is there anything else you think we should know before we let you go? Just, I think the lessons learned. We’re going to talk *** lot about what’s going on now, but these lessons learned are, are important because We will go through another cycle. We do it about every 5 to 7 years. Revenues will peak again and we will again spend everything that comes in. They won’t peak like they did last time, but if we can put reserves away when revenues get really high where spending might reflect what an average would be, and over that average we put those away in the reserve, we’re much better suited. To then experience and deal with the fall off that inevitably happens, was the governor dealt *** tough hand with COVID because I mean in that time he was bracing for an economy that was going to be much tougher, make it much harder for the state to spend, and then ultimately realized, oh no, the economy ended up doing way better and now we have this massive surplus. Is it, was he dealt just *** *** difficult situation and ultimately the decisions around it. Became what they were, or should he have had more fiscal prudence in that moment? There’s no doubt that he was dealt *** difficult situation, and I will grant that. But it was not very long before it was readily recognized that revenues were not going to be *** problem both in terms of the economy turning around in the summer of 2020, which surprised everybody, including myself. People were stuck at home and so they just spent money. It was remarkable. But we also had dollars from Washington DC coming out of helicopters too, so we had the combination. Of *** strong economy that wasn’t otherwise expected, as well as the gifts from Washington DC that created *** surplus that was almost unimaginable today or before that, and we did not use the fiscal prudence to hide some of that away to help the time when we knew it was going to drop off. The other thing is the shutdown of the economy and schools. Um, I will grant that it was. *** difficult time to be governor and unprecedented, and one might not know exactly what to do, but he had plenty of advice that suggested that to shut the economy down as much as he did and to not recognize the fact that the people truly at risk were older folks, not younger folks, and he shut it down for everybody. So I think he made mistakes. I’ll grant that it was unprecedented, *** difficult time. But I don’t think it was managed very well, he said, uh, I asked him if he had any regrets, anything he’d do differently when it came to the budget, and he gave me *** lengthy response and some back and forth on revenue that maybe could have been saved, but that some things that ended up becoming political capital anyway, he said, but I want to just focus on, you know, the windshield instead of the rearview mirror. Is that, is that the right thing to do? Well, sure, you can’t do anything about the past. Um, the interesting thing about the past is you know everything about it, but you can’t do anything about it. Future, uh, you don’t know anything about it, but there’s *** lot of things you can do about it. So yes, focus on the windshield, but we have to learn from the past. All right, Senator Nelo, thank you so much for your time. Thank you. Appreciate it.

Republican state senator says Gov. Newsom’s proposal won’t leave California with a “clean budget” | California Politics 360

Updated: 8:25 AM PDT May 17, 2026

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Republicans aren’t convinced Gov. Gavin Newsom’s proposed spending plan will leave California in a good financial position when Newsom terms out of office early next year. “He even had the audacity to compare it to what Gov. Brown left him, which was a surplus,” said State Sen. Roger Niello, R-Fair Oaks, in an interview on California Politics 360. Gov. Newsom’s proposal is relying on some risky assumptions, Niello said. With the well-performing stock market bolstered by artificial intelligence, the state’s personal income taxes have been billions more than anticipated, meaning California’s government has more money to work with than expected this upcoming year.California, over the last several years, has been spending more money than it’s bringing in, and the governor and state lawmakers have had to close multi-billion-dollar budget gaps the last three years.State financial experts in Newsom’s administration and the Legislature have said the state is facing a structural budget problem, meaning there could be shortfalls in the years after Newsom leaves office.To help close those possible gaps, Newsom announced California has brought in $16.5 billion more in tax revenue than expected over the last three years. That money has largely been to the result of the stock market doing well. “Revenue is so volatile and with the stock market the way it is, the risks are high that we could experience difficulties in the next ten months,” Niello warned. When asked if this state spending plan could put the next governor in a challenging situation he said, “absolutely.” “That governor, as well as the legislature,” Niello said, noting many new state lawmakers will be elected next year because of term limits. Niello has said he is very concerned about the $20 billion debt the state owes the federal government for pandemic-related unemployment insurance. California is the only state in the nation that has not paid back the funds. Because the state put nothing toward the principal of the loan, every business in California is paying increased payroll taxes, that will continue to rise every year until the loan is paid off. Gov. Newsom acknowledged on Thursday that this is a big issue, and one he is hoping to address before he leaves office. He has repeatedly said the legislature has blocked his attempts to put money down on the principal of the loan. “Everybody in the legislature says they care about business, especially small business. But I always say, don’t pay attention to the words, pay attention to the actions,” Niello said. Niello said the state should have used its surplus money between 2020 and 2022 toward the debt. He said now it’s much more of a daunting task to pay it off now with the state’s money situation. “There’s no sense in crying over spilled milk, but you can learn how to not spill it in the future,” he said. KCRA 3 Political Director Ashley Zavala reports in-depth coverage of top California politics and policy issues. She is also the host of “California Politics 360.” Get informed each Sunday at 8:30 a.m. on KCRA 3.

Republicans aren’t convinced Gov. Gavin Newsom’s proposed spending plan will leave California in a good financial position when Newsom terms out of office early next year.

“He even had the audacity to compare it to what Gov. Brown left him, which was a surplus,” said State Sen. Roger Niello, R-Fair Oaks, in an interview on California Politics 360.

Gov. Newsom’s proposal is relying on some risky assumptions, Niello said.

With the well-performing stock market bolstered by artificial intelligence, the state’s personal income taxes have been billions more than anticipated, meaning California’s government has more money to work with than expected this upcoming year.

California, over the last several years, has been spending more money than it’s bringing in, and the governor and state lawmakers have had to close multi-billion-dollar budget gaps the last three years.

State financial experts in Newsom’s administration and the Legislature have said the state is facing a structural budget problem, meaning there could be shortfalls in the years after Newsom leaves office.

To help close those possible gaps, Newsom announced California has brought in $16.5 billion more in tax revenue than expected over the last three years. That money has largely been to the result of the stock market doing well.

“Revenue is so volatile and with the stock market the way it is, the risks are high that we could experience difficulties in the next ten months,” Niello warned.

When asked if this state spending plan could put the next governor in a challenging situation he said, “absolutely.”

“That governor, as well as the legislature,” Niello said, noting many new state lawmakers will be elected next year because of term limits.

Niello has said he is very concerned about the $20 billion debt the state owes the federal government for pandemic-related unemployment insurance. California is the only state in the nation that has not paid back the funds.

Because the state put nothing toward the principal of the loan, every business in California is paying increased payroll taxes, that will continue to rise every year until the loan is paid off.

Gov. Newsom acknowledged on Thursday that this is a big issue, and one he is hoping to address before he leaves office. He has repeatedly said the legislature has blocked his attempts to put money down on the principal of the loan.

“Everybody in the legislature says they care about business, especially small business. But I always say, don’t pay attention to the words, pay attention to the actions,” Niello said.

Niello said the state should have used its surplus money between 2020 and 2022 toward the debt. He said now it’s much more of a daunting task to pay it off now with the state’s money situation.

“There’s no sense in crying over spilled milk, but you can learn how to not spill it in the future,” he said.

KCRA 3 Political Director Ashley Zavala reports in-depth coverage of top California politics and policy issues. She is also the host of “California Politics 360.” Get informed each Sunday at 8:30 a.m. on KCRA 3.