THE BUZZ: Friday brought another $9.3 billion reasons this year’s budget debate could be the most challenging in a decade.

Gavin Newsom detailed his plan to close a deficit that has grown substantially since January. Here are some key takeaways as we rumble toward a mid-June deadline:

PRESSURE POINTS — Many of Friday’s responses deployed the kind of conciliatory language you use to avoid antagonizing a powerful negotiating partner. But both Assembly Speaker Anthony Rendon and Senate President Pro Tem Toni Atkins stressed restoring transit funding as commuter rail lines teeter on a fiscal precipice. Rendon reupped Assembly Democrats’ push to get childcare providers a substantial pay raise. Watch for those items to be two central points of dispute.

RAINY FORECAST — An extraordinarily wet winter had Newsom drop a $125 million drought funding proposal and instead seek $125 million for flood control. But he doesn’t want to crack that $22.3 billion Rainy Day Fund until the weather worsens. While the state’s not yet projecting a recession, even a mild one could mean another $40 billion evaporating from state coffers.

TAX ATTACK — Newsom reiterated his categorical opposition to hiking taxes, warning it would compromise California’s competitiveness and drive businesses to other states. Atkins didn’t mention her caucus’ evidently DOA corporate tax hike. A top-heavy tax system that drew nearly half of income taxes from the wealthiest 1 percent helps explain the vertiginous one-year swing from a $100 billion surplus to a $31.5 billion hole. Newsom said he found little appetite among the Legislature and interest groups for a volatility-smoothing tax overhaul.

BONDS THAT BIND — Rather than find revenue from higher taxes, Newsom hopes a to-be-crafted climate bond will make up for more than a billion dollars diverted from climate projects. And that’s on top of the behavioral health bond he called for earlier this year. Both would need two-thirds legislative votes and the approval of voters who rejected the last statewide bond.

COULDA BEEN WORSE — Sometimes not losing more counts as a win. Hence, some environmentalists are lauding a budget that slashes $6 billion in multi-year climate spending. They were bracing for a much more painful reduction, so it came as a relief that Newsom didn’t cut deeper than he proposed in January even as the deficit ballooned. The governor also wants millions of dollars and more positions to support his crackdown on oil industry profits.

PERMIT ME — Newsom again used his budget reveal to push the Legislature on policy. Back in January, he pushed for a bill attaching more strings to local homelessness funding. On Friday, he asked for legislation making it easier to permit energy infrastructure, manufacturing and other construction projects beyond stadiums and housing. He promised details this week.

BUENOS DÍAS, good Monday morning. Budget subcommittees will be busy today as lawmakers dig into the governor’s proposal. Looking ahead, Suspense File Day looms later this week with Appropriations Committees facing a Friday deadline to send bills to the floor.

Got a tip or story idea for California Playbook? Hit us up at [email protected] and [email protected] or follow us on Twitter @JeremyBWhite and @Lara_Korte.

WHERE’S GAVIN? Nothing official announced.

QUOTE OF THE DAY: “We tend to write checks we can’t keep, and then we let people down, and then we’re cutting the program. I don’t think that’s always right. It’s better to be more honest with folks about what we think we can do and what we can’t do.” Newsom sets expectations.

TWEET OF THE DAY:

WE’RE HIRING — POLITICO is embarking on an exciting expansion in the Golden State and looking for another journalist to join our growing team as a California Playbook author. More in the job description here.

— “‘A daily game of Russian roulette’: Homeless in San Diego,” by The New York Times’ Eli Saslow: “Abdul had spent the last several years bouncing between temporary apartments and being forced by the police to move his sleeping bag from one sidewalk to the next, until the closest thing he had left to permanent shelter was a parking garage on a hill overlooking downtown.”

FIRST IN PLAYBOOK — OC RESET: After dropping out of the race to succeed Rep. Katie Porter, Democratic former Rep. Harley Rouda is throwing his support behind Democratic Women for American Values and Ethics founder Joanna Weiss as she vies with state Sen. Dave Min in the battleground CA-47.

SCHIFF SHUFFLE — Former State Department and Rep. Barbara Lee staffer Jirair Ratevosian is joining the crowded Democratic pack seeking to replace Rep. Adam Schiff in the safely blue 30th Congressional district.

— Newsom and teachers unions back mandatory dyslexia screening in California schools, POLITICO’s Blake Jones: The Democratic governor, who has dyslexia, did not back mandatory screenings in his first four years in office despite California having some of the country’s lowest literacy rates. Legislation imposing such a requirement has stalled for years under opposition from the California Teachers Association, which argued such policies would take away time from the classroom and misidentify English language learners as having dyslexia.

— “Some asylum seekers still stuck between border fences after the end of Title 42,” by KPBS’ Kitty Alvarado: “Jasso said the asylum seekers are now mostly women and children who fled from danger in their homelands and now find themselves in precarious conditions. Most of them have been there three days, some of them a week.”

— “Her daughter was killed, her son was taken away. This new Yolo program found her a new home,” by The Sacramento Bee’s Maya Miller: “The Yolo County Basic Income Program, or YOBI, gives monthly cash payments to local parents with children under age 6. The 24-month pilot, which began in April 2022, chose participants in need of stable housing who were enrolled in the California Work Opportunity and Responsibility to Kids (CalWORKS) Housing Support Program.”

— “S.F. is still on edge over shoplifting. Can downtown businesses stop thieves without risking lives?,” by the San Francisco Chronicle’s St. John Barned-Smith and Kevin Fagan: “Some law enforcement officials say shop owners and security guards have been hamstrung by local and state policies that have reduced punishment for nonviolent offenders, and emboldened them as a result. The argument is rejected by progressives who say petty theft is often driven by poverty and inequality, and favor rehabilitation over incarceration.”

— “NIMBYism over homeless housing spans race and politics, firing up suburban protests,” by the Los Angeles Times’ Ruben Vives: “Amid a lack of affordable rentals, Southern California counties have tried addressing their homelessness woes by building tiny homes and temporary shelters, or converting motels and hotels into permanent housing. But their efforts have run into fierce “not in my backyard” opposition in suburbs from Chatsworth to Irvine, even as the areas have become more diverse and less conservative.”

— “State bans Stanford-affiliated hospital from treating some of California’s sickest children after finding dozens of violations,” by the San Francisco Chronicle’s Matthias Gafni and Cynthia Dizikes: “The violations documented last week by the Department of Health Care Services, or DHCS, call into question the qualifications and competency of the unit’s doctors and nurses, as well as the care they were providing to children in the pediatric intensive care unit, or PICU.”

— Biden world goes to the mat to get Julie Su confirmed, by POLITICO’s Jennifer Haberkorn: Su’s nomination to replace Marty Walsh as Labor secretary has hung in limbo for weeks, with several moderate Democrats keeping quiet about whether they would back her.

— “California Republican leads push on bigger standard deduction,” by Roll Call’s Laura Weiss: “In a unique twist, Steel singles out the standard deduction for preserving in her bill, though she backs making many of the provisions of the 2017 law permanent, according to a statement. Her bill follows a variety of Republican proposals that would save particular pieces or the whole of provisions set to expire, including the larger standard deduction.”

“Being hungry and homeless shouldn’t be a death sentence,” opines Rep. Maxine Waters for the HuffPost: “No one in America should be homeless, and it certainly should not be a death sentence should a person become homeless.”

— “Developer fined $4 million for bribing former L.A. Councilmember Jose Huizar,” by the Los Angeles Times’ Michael Finnegan.

— “S.F. Bay Area home prices up after 9 straight months of declines,” by the San Francisco Chronicle’s Danielle Echeverria and Adriana Rezal.

— “San Diego Roman Catholic diocese will file for bankruptcy in November,” by The San Diego Union Tribune’s Greg Moran.

— “Fentanyl overdoses contribute to surge in L.A. County homeless deaths,” by the Los Angeles Times’ Emily Alpert Reyes.

— “Milk shake-up: High school student sues school district over dairy flap,” by The Washington Post’s Laura Reiley.

— Nick Papas of Airbnb … Alejandro Gonzalez-Stewart … Elizabeth Poniarski … Steven Yee

(Was Sunday): Mark Zuckerberg … former DHS Secretary Kirstjen Nielsen … Erwin Chemerinsky (7-0) … former Reps. Jackie Speier and Mimi Walters … Mike Feuer ... Robert Levinson ... Daniel Lehmann

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