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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.

Cases: 3250649

Reported Deaths: 38817
CountyCasesDeaths
Los Angeles109171215897
San Bernardino2693141746
Riverside2684903003
Orange2403142839
San Diego2314812465
Santa Clara997021314
Kern91119591
Fresno866731084
Sacramento850621194
Alameda72024929
Ventura67526546
San Joaquin60545844
Contra Costa55593492
Stanislaus49690808
Tulare43574542
Monterey38434261
San Mateo34738356
San Francisco30874296
Santa Barbara27321267
Solano27317121
Imperial25812514
Merced25743332
Sonoma25536254
Kings20223161
Placer18129192
San Luis Obispo17151161
Madera14130175
Santa Cruz13088136
Marin12067166
Yolo11361147
Shasta10212138
Butte9943136
El Dorado824566
Napa814552
Sutter812984
Lassen530916
San Benito525152
Yuba522730
Tehama456446
Tuolumne351241
Nevada341073
Mendocino332236
Amador311333
Lake274832
Humboldt267227
Glenn203422
Colusa19079
Calaveras172323
Siskiyou150413
Mono11574
Inyo105329
Del Norte8783
Plumas6185
Modoc3974
Mariposa3585
Trinity3065
Sierra950
Alpine740
Unassigned00
Chico
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Oroville
Cloudy
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Hi: 50° Lo: 43°
Feels Like: 50°
Chico
Cloudy
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Hi: 44° Lo: 35°
Feels Like: 42°
Red Bluff
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Red Bluff
Cloudy
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Hi: 49° Lo: 39°
Feels Like: 45°
Chico
Cloudy
46° wxIcon
Hi: 53° Lo: 41°
Feels Like: 42°
The first wave of rain, snow and wind has moved over California, but many more chances for rain, snow and gusty wind are in our short term and long term forecast. After a relatively quiet evening, we can expect more rain and snow starting early Thursday morning.
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