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.

Confirmed Cases: 122168

Reported Deaths: 4444
CountyConfirmedDeaths
Los Angeles596922532
Riverside8303345
San Diego7798283
Orange6783165
San Bernardino5650209
Alameda364197
Santa Clara2850144
San Francisco264443
Imperial249330
Kern246245
San Mateo224484
Tulare208392
Fresno194437
Santa Barbara171414
Contra Costa154738
Sacramento149058
Ventura119035
Kings11876
San Joaquin102436
Stanislaus79230
Monterey62110
Sonoma5934
Solano55922
Marin52517
Merced3107
San Luis Obispo2881
Placer2599
Santa Cruz2192
Yolo21624
Madera1293
Napa1263
Humboldt1044
El Dorado980
San Benito962
Butte601
Nevada491
Sutter482
Del Norte470
Shasta404
Mono371
Mendocino330
Yuba311
Lake300
Inyo201
Glenn170
Calaveras160
Mariposa161
Amador100
Siskiyou90
Colusa70
Tehama61
Tuolumne50
Lassen50
Plumas40
Alpine20
Sierra10
Trinity10
Unassigned00
Chico
Few Clouds
72° wxIcon
Hi: 90° Lo: 59°
Feels Like: 72°
Oroville
Clear
74° wxIcon
Hi: 90° Lo: 59°
Feels Like: 74°
Paradise
Few Clouds
72° wxIcon
Hi: 83° Lo: 55°
Feels Like: 72°
Chester
Clear
76° wxIcon
Hi: 78° Lo: 49°
Feels Like: 76°
Red Bluff
Clear
75° wxIcon
Hi: 90° Lo: 59°
Feels Like: 75°
Willows
Few Clouds
72° wxIcon
Hi: 94° Lo: 57°
Feels Like: 72°
Today will be nice but much cooler weather this weekend with a chance of showers and thunderstorms, mostly in the north valley and mountains. We heat up again next week.
KHSL Severe
KHSL Radar
KHSL Temperatures

Community Events