SACRAMENTO - In his final act of the year’s regular legislative session, Governor Gavin Newsom September 30, 2024 announced he signed AB 179, creating new tools for the state to set aside a portion of anticipated surplus funds in future fiscal years.

“Building on the balanced budget we passed in June that eliminated our deficit - without raising taxes on hardworking Californians and without deep program cuts - this legislation ensures that we continue to live within our means, just as families across the state do. By creating a holding account for projected surpluses, we’re taking a conservative, prudent approach to budgeting.” - Governor Gavin Newsom

More tools to put surplus revenues aside 

For the first time in California history, this legislation creates a Projected Surplus Temporary Holding Account, allowing the state to place anticipated surpluses in reserve for future use. This better supports that California’s budget is balanced and that funds are available for critical services such as education, healthcare, and infrastructure improvements, without the need for sudden program cuts or tax increases.

The bill also highlights the state’s dedication to smart fiscal management, allowing the Department of General Services (DGS) to increase efficiencies in public works projects, job order contracting, and contracting oversight?.

Responsible use of surpluses

This legislation builds on the fiscal discipline that has been at the heart of California’s budgetary approach for years. Under Governor Newsom’s leadership:

- California eliminated its deficit: Through careful budgeting and prudent fiscal management, the state has successfully closed its budget deficit, ensuring a balanced budget that extends across the next two fiscal years.
- No tax increases: Enacting a balanced budget without raising taxes on hardworking Californians or making deep cuts to core services that California families rely on, such as public safety, education, and healthcare.
- Strong reserves: The Governor and Legislature have consistently set aside record amounts of reserves, ensuring that the state is prepared for any future economic challenges.

Fiscal discipline, smart budgeting

The state’s new holding account is a safeguard, ensuring that funds are only spent once they are realized. In previous years, when California experienced significant budget surpluses, much of that money was used to pay down long-term debt and fund one-time expenditures, helping to maintain a sustainable budget path. AB 179 ensures that this responsible approach to budgeting continues well into the future.

The Governor today announced that he has signed the following budget-implementing legislation:

- AB 157 by Assemblymember Jesse Gabriel (D-Encino) - Budget Act of 2024.
- AB 158  by Assemblymember Jesse Gabriel (D-Encino) - Budget Acts of 2022 and 2023.
- AB 176 by the Committee on Budget - Education finance: education omnibus trailer bill.
- AB 177 by the Committee on Budget - Health.
- AB 178 by the Committee on Budget - Public resources trailer bill.
- AB 179 by the Committee on Budget - State government.
- AB 180 by Assemblymember Jesse Gabriel (D-Encino) - Budget Act of 2024.
- AB 181 by the Committee on Budget - State employment: State Bargaining Units: agreements: compensation and benefits.
- AB 218 by the Committee on Budget - Oil and gas: trailer bill.