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As revenues plummet, California budget cuts billions

California Gov. Gavin Newsom is proposing to cut $6.1 billion from a variety of programs as part of next year's budget.

Posted: May 14, 2020 12:41 PM
Updated: May 15, 2020 10:25 AM

SACRAMENTO, Calif. (AP) — California Gov. Gavin Newsom proposed $14 billion in budget cuts on Thursday because of the coronavirus, with more than half coming at the expense of public schools already struggling to educate children from afar during a pandemic.

The cuts are part of a plan to cover a $54.3 billion budget deficit caused by plummeting state revenues after a mandatory, statewide stay-at-home order forced most businesses to close and put more than 4.7 million people out of work.

Thursday, Newsom proposed to fill that hole through a combination of cuts, tax increases, canceled spending, internal borrowing and tapping the state’s reserves. It also includes a 10% pay cut for all state workers, including the governor himself. Overall, the $203 billion spending plan is about 5% lower than the budget lawmakers approved last year.

“Nothing breaks my heart more than having to make budget cuts,” he said. “There’s a human being behind every single number.”

RELATED: California governor to propose 10% pay cut

Newsom said all of those cuts could be avoided if the federal government approves a $1 trillion aid package for state and local governments. The state would need that money before July 1 to avoid the cuts, a daunting task considering the partisan divide between Democrats who control the U.S. House of Representatives and the Republicans in charge of the U.S. Senate.

“Depending on the federal government is not going to be a solution,” said Republican Sen. Jim Nielsen of Red Bluff.

Public education, which accounts for 40% of all state general fund spending, was the hardest hit. School districts get money based on a formula outlined in the state Constitution that is based on revenues, per capita personal income and school attendance.

That guarantee dropped by $19 billion. But Newsom added a bunch of money to offset those losses. He wants to temporarily eliminate some business tax deductions to create $4.5 billion in new revenue. Plus, he wants to give school districts $4 billion from the federal Coronavirus Relief Fund. Even with those changes, schools are looking at a loss of $7.5 billion compared to the budget Newsom proposed in January.

“They will be the single largest cuts public schools have ever had in California history,” said Kevin Gordon, a lobbyist who represents most public school districts. “Public school officials do not know where to start when it comes to trying to reopen with so much less money to work with.”

The 10% pay cut for the more than 233,000 state workers would save about $2.8 billion and includes firefighters and health care workers. The lowest-paid workers would still get planned raises, however, to bring them up to the state’s $15 per hour minimum wage law.

The pay cut proposal is just the starting point for a negotiation with public-sector labor unions. The Service Employees International Union, which represents about 96,000 state workers, plans to try to negotiate an alternative.

“We could put our head in the sand and say, ‘let’s take it,’ ” said Yvonne Walker, president of SEIU Local 1000. “But you know what local 1000? We’re not head-in-the-sand people.”

Just four months ago, Newsom proposed a $222.2 billion spending plan that included a nearly $6 billion surplus and a host of new programs. Thursday, nearly all of that new spending disappeared. That included eliminating plans to give government-funded health insurance to low-income adults 65 and older living in the country illegally. And it cancels a plan to make more older adults eligible for Medicaid.

“These potential cuts will be a body blow to the health care system we all rely on, at the very time we need it funded more than ever, in the middle of a pandemic,” said Anthony Wright, executive director of Health Access California, a statewide health care consumer advocacy group.

Assembly Speaker Anthony Rendon called the state’s budget picture grim but said it was too soon to know which of Newsom’s proposed cuts his Democratic caucus would support. He said education and the social safety net must be priorities, and he, like Newsom, said the state needs the federal government’s help.

“We have well-placed Republicans from California in Congress, and we’re going to obviously appeal to them and make sure they remember, obviously, where they got elected from,” Rendon said.

California’s financial downturn is cushioned by a $16 billion rainy day fund set aside during the good times. Newsom’s budget, which now must be negotiated with the state Legislature by June 15, calls for spending the rainy day fund down over the next three years, starting with roughly $8 billion in the upcoming year. He’s also tapping two other reserve funds for another $1 billion.

The state would also spend more than $200 million to boost the state’s preparations for looming wildfires and other disasters, including hiring another 500 firefighters and 100 support personnel to help make up for the loss of dozens of inmate firefighters who were paroled to ease the risk of coronavirus outbreaks.

Nothing was safe from the cuts, including funding to combat homelessness, a topic that Newsom devoted his entire “State of the State” speech to in February. He had planned to give $750 million in state funding to local governments and other groups to pay for homeless services. Instead, that money will be replaced by federal money and used to buy hotels and motels to house the homeless during the pandemic.

“I am deeply concerned that we are shifting away from addressing our housing and homelessness crises,” said Democratic Assemblyman David Chiu of San Francisco. “I am disappointed to see funding for cities to address homelessness eliminated.”

(Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.)

California Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 101050

Reported Deaths: 3895
CountyConfirmedDeaths
Los Angeles487612201
Riverside7139303
San Diego6882249
Orange5646136
San Bernardino4567176
Alameda304993
Santa Clara2688140
San Francisco240840
San Mateo196382
Kern194136
Tulare179679
Santa Barbara160412
Fresno153526
Contra Costa137537
Imperial135224
Sacramento131956
Ventura101732
San Joaquin77133
Kings6983
Stanislaus67028
Sonoma5244
Solano49920
Monterey4298
Marin42014
Merced2737
San Luis Obispo2631
Santa Cruz2052
Yolo20022
Placer1949
Napa1093
Humboldt982
Madera902
El Dorado800
San Benito762
Sutter422
Nevada411
Butte400
Del Norte400
Shasta374
Mono351
Yuba281
Mendocino230
Lake190
Inyo191
Mariposa161
Calaveras150
Glenn130
Amador100
Siskiyou61
Colusa50
Tuolumne40
Plumas40
Lassen40
Tehama41
Alpine20
Trinity10
Sierra10
Unassigned00
Chico
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Oroville
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Paradise
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Chester
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Today a heat wave continues but tomorrow night rain moves in, lasting into Saturday with much cooler temperatures. We warm up again on Tuesday.
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