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California Legislature, governor at odds over budget deficit

California lawmakers and Gov. Gavin Newsom do not agree yet on how to close the state's $54.3 billion budget deficit.

Posted: Jun 5, 2020 10:34 AM

SACRAMENTO, Calif. (AP) — Gov. Gavin Newsom’s task of closing California’s estimated $54.3 billion budget deficit will come down to a battle with the Democratic-dominated Legislature over how much pain the state can endure now versus putting it off to next year and beyond.

Both of the budget proposals from Newsom, a Democrat, and the state Legislature save money by putting off paying billions of dollars of the state’s commitments, a common tactic used by states across the country when times are tough.

But Newsom is more willing to make permanent budget cuts now rather than push those costs to future years and hope the economy improves. His proposal relies on Congress sending the state more money to avoid those cuts. But if they don’t, his plan would cut billions to public schools, health care, child care and programs designed to keep older adults out of nursing homes.

The Legislature’s plan also relies on the federal government to cover the shortfall. But lawmakers aren’t willing to risk those budget cuts should it not happen. Instead, they put off some of the state’s biggest expenses until next year — most notably delaying $9 billion in payments to public school districts. This lets the school districts go ahead and spend the money with the promise the state will pay them back.

“It’s possible the economy could recover more robustly than our economic experts are projecting. But it’s also possible all these numbers could be even worse than we are projecting even now,” Vivek Viswanathan, chief deputy budget director for Newsom’s Department of Finance, told state lawmakers on Thursday. “We are concerned about a budget that adds several billion dollars in additional deficits.”

Lawmakers, many of whom are running for re-election, are more focused on the short-term with an emphasis on restarting the economy. A big component of that is reopening public schools. Some of the state’s largest districts have said they likely wouldn’t be able to reopen in the fall should the budget cuts take effect.

“It’s not easy to do the deferrals, but what’s the alternative? Get an award, a pat on the back for an austerity budget and shut down the schools and child care centers?” Democratic Assemblyman Kevin McCarty said. “That’s not going to help turn the economy back on.”

Compounding the problem is no one really knows how much money the state will have to spend next year. It pushed its deadline to file tax returns to July 15 because of the coronavirus pandemic.

The Newsom administration said the state collected about $500 million more in taxes last month than it had anticipated. But also on Thursday, new data showed the number of unemployment claims increased over the previous week.

“Contrary to expectations, California companies continue to shed jobs at a high pace,” said Michael Bernick, former director of the California Employment Development Department and a lawyer with the firm Duane Morris.

Lawmakers have until June 15 to send an operating budget to Newsom’s desk. If lawmakers miss that deadline, they don’t get paid. Newsom said the negotiations are “in a very good place under very difficult circumstances.”

Democratic Assemblyman Phil Ting, chair of the Assembly Budget Committee, said no one knows where the economy is going and “whatever budget we put together is going to be wrong.”

“That’s where I would say is one of the primary differences in our budget,” Ting said. “We are assuming greater financial risk for the millions of Californians who aren’t able to save $400, can’t get access to credit, can’t borrow any money, can’t assume any of that financial risk.”

California Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 914888

Reported Deaths: 17460
CountyConfirmedDeaths
Los Angeles3020777027
Riverside669931303
San Bernardino633671073
Orange589801454
San Diego55210877
Kern33928416
Fresno30969439
Sacramento25601491
Santa Clara24425392
Alameda23471462
San Joaquin21729489
Contra Costa18763242
Stanislaus17714398
Tulare17590288
Ventura14330165
Imperial12967336
San Francisco12189140
Monterey1141990
San Mateo11198159
Santa Barbara9827122
Merced9531155
Sonoma9494136
Kings826483
Solano744576
Marin7096129
Madera503774
Placer420757
San Luis Obispo417432
Yolo321959
Butte309552
Santa Cruz280825
Napa196616
Shasta195431
Sutter186512
San Benito144215
El Dorado13514
Yuba132310
Mendocino113621
Tehama8928
Lassen7661
Lake69816
Glenn6713
Nevada6238
Humboldt56810
Colusa5516
Calaveras34218
Amador33116
Tuolumne2754
Inyo23115
Siskiyou2050
Del Norte1801
Mono1802
Mariposa792
Plumas700
Modoc360
Trinity270
Sierra60
Alpine30
Unassigned00
Chico
Clear
54° wxIcon
Hi: 77° Lo: 44°
Feels Like: 54°
Oroville
Clear
50° wxIcon
Hi: 78° Lo: 46°
Feels Like: 50°
Paradise
Clear
54° wxIcon
Hi: 72° Lo: 50°
Feels Like: 54°
Chester
Clear
18° wxIcon
Hi: 73° Lo: 37°
Feels Like: 18°
Red Bluff
Clear
44° wxIcon
Hi: 82° Lo: 46°
Feels Like: 42°
Willows
Clear
54° wxIcon
Hi: 79° Lo: 43°
Feels Like: 54°
Winds have calmed down but we remain dry. Temperatures will be in the upper-70s to low-80s for the rest of the week. This quiet weather is good for fire danger but unfortunate since no rain is in the forecast.
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