California governor looks to plug $54 billion budget hole

California Gov. Gavin Newsom is expected to reveal his plan Thursday for plugging an estimated $54.3 billion, coronavirus-created hole in the state budget.

Posted: May 14, 2020 8:35 AM

SACRAMENTO, Calif. (AP) — California Gov. Gavin Newsom is expected to reveal his plan Thursday for plugging an estimated $54.3 billion, coronavirus-created hole in the state budget.

Four months ago, Newsom revealed a $222.2 billion spending plan that included a nearly $6 billion surplus and a host of new programs, including starting the state’s own prescription drug label and giving taxpayer-funded health care to low-income senior citizens living in the country illegally.

But that all changed on March 19, when Newsom issued a mandatory, statewide stay-at-home order to slow the spread of the new coronavirus. The order closed schools and most businesses, prompting more than 4.5 million people to file for unemployment benefits. With so many people out of work, state tax collections have plummeted.

Budget problems are not new for California, having spent much of the last decade navigating through multi-billion deficits in the wake of the Great Recession.

But it is a first for Newsom, who had a historic $21 billion surplus when he took office in 2019. He won praise from key constituencies for paying off the state’s lingering recession-era debts and handing out first-in-the-nation subsidies to help middle-income earners pay their monthly health insurance premiums.

Now, Newsom has to decide what to cut.

“My history with government is it does a really good job of expanding and it does an awful job of contracting,” said Republican state Sen. John Moorlach, who was the Orange County treasurer-tax collector in the aftermath of the county’s bankruptcy in the mid-1990s.

Lawmakers must pass an operating budget by June 15. If they don’t, they forfeit their pay. But lawmakers could amend the state spending plan after that date.

On Wednesday, Newsom said his revised budget will include more than $200 million to increase the state’s preparations for looming wildfires and other disasters. That includes hiring 600 firefighters who will help make up for the loss of dozens of inmate firefighters who were paroled early to ease the risk of coronavirus outbreaks in state prisons.

It includes money for the state’s Public Utilities Commission to hire more than 100 people for a new wildfire safety division to oversee Pacific Gas and Electric and other power companies whose equipment can spark fires and who have increasingly turned out the lights to prevent ignitions during dry windstorms.

Newsom also wants to spend $50 million in grants to local governments to help prepare for those power shutoffs.

The governor has not said how he will make up the revenue shortfall, but he has repeatedly noted that California is in a better position to deal with it than before the last recession. Back then, the state had no reserves and had to make deep cuts to state services.

This time, California has at least $16 billion in its “rainy day fund.” The money isn’t enough to cover the shortfall, but it cushions the blow.

State Sen. Holly Mitchell, a Democrat from Los Angeles and the chair of the Budget and Fiscal Review Committee, said lawmakers have identified $94 billion in savings over the next two years. About $41 billion comes from reserves, spending cuts, internal loans and deferring some costs to future years.

The rest would come from the federal government, including a $33 billion request that Congress has not yet approved. State Senate President Pro Tempore Toni Atkins vowed earlier this week to avoid “major ongoing program cuts or broad middle class tax increases,” saying they may help in the short term but “cause more economic damage and prolong our budget struggles.”

“Our budget approach seeks to avoid becoming part of the economic problem,” she said.

The state Assembly’s leaders have made no such promises. Assembly Budget Committee Chair Phil Ting has said the chamber is considering all options, including tax increases. A memo from the Assembly Budget Committee this week said they expect “to make difficult decisions to ensure California’s budget is balanced.”

California Coronavirus Cases

Data is updated nightly.

Cases: 3563578

Reported Deaths: 51953
CountyCasesDeaths
Los Angeles119089421328
Riverside2894503767
San Bernardino2862912816
Orange2610223904
San Diego2596413271
Santa Clara1104221777
Kern102627826
Fresno952021443
Sacramento931801472
Alameda804961241
Ventura77534844
San Joaquin665691101
Contra Costa62164674
Stanislaus56024946
Tulare47784758
Monterey42138328
San Mateo38922515
San Francisco34213410
Santa Barbara31763409
Solano30024164
Merced28915397
Sonoma28063298
Imperial26888591
Kings21951218
Placer19763232
San Luis Obispo19612227
Madera15436209
Santa Cruz14588183
Marin13136197
Yolo12816185
Shasta10972174
Butte10941160
El Dorado9095100
Napa901469
Sutter884597
San Benito575959
Yuba573336
Lassen560119
Tehama508152
Nevada395274
Tuolumne394659
Mendocino379643
Amador345741
Humboldt318033
Lake315341
Glenn222023
Colusa212813
Calaveras190547
Siskiyou174014
Inyo128737
Mono12114
Del Norte9875
Plumas6536
Modoc4524
Mariposa3957
Trinity3675
Sierra990
Alpine810
Unassigned00
Chico
Clear
52° wxIcon
Hi: 70° Lo: 36°
Feels Like: 52°
Oroville
Clear
54° wxIcon
Hi: 65° Lo: 48°
Feels Like: 54°
Chico
Clear
52° wxIcon
Hi: 61° Lo: 44°
Feels Like: 52°
Red Bluff
Clear
53° wxIcon
Hi: 46° Lo: 16°
Feels Like: 53°
Red Bluff
Clear
53° wxIcon
Hi: 67° Lo: 43°
Feels Like: 53°
Chico
Clear
52° wxIcon
Hi: 72° Lo: 44°
Feels Like: 52°
After a windy Saturday and fairly breezy Sunday, the wind we've had is weakening as the month of February comes to a close. We can expect a mostly clear first morning of March, followed by more clouds and mild air by the afternoon.
KHSL Severe
KHSL Radar
KHSL Temperatures

Community Events