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Governor Newsom announces $54 billion state budget shortfall

Multiple times throughout the address, Newsom asked the federal government for more money to cover the shortfall.

SACRAMENTO COUNTY, Calif. — On Thursday, Governor Gavin Newsom addressed the $54 billion hole in California’s budget that was brought on by the coronavirus pandemic.

“COVID-19 has caused California and economies across the country to confront a steep and unprecedented economic crisis – facing massive job losses and revenue shortfalls,” said Newsom. “Our budget today reflects that emergency. We are proposing a budget to fund our most essential priorities – public health, public safety and public education – and to support workers and small businesses as we restart our economy, but difficult decisions lie ahead. With shared sacrifice and the resilient spirit that makes California great, I am confident we will emerge stronger from this crisis in the years ahead.”

The May revision proposes canceling new initiatives proposed in the governor’s budget, canceling and reducing spending included in the 2019 Budget Act, take from reserves, and borrowing from special funds.

Newsom broke down where some of the money will come from like this:

  • CARES Act will cover 15%
  • Money from state reserves will cover 16%
  • Pulling back from programs that are already on the books will cover 15%
  • Statewide budget cuts will cover 26% - this includes a 10% pay cut for every state employee, including Newsom

Newsom said, “While the numbers have changed, our values remain and we are committed despite [the] budget shortfall to advance not only an effort to balance the budget, but to commit to principles and values.”

The COVID-19 recession in California has resulted in more than 4 million unemployment claims being filed since mid-March, bringing the projected unemployment rate in at 18% for the year. There is also a $41 billion drop in revenues compared to January’s forecast. Newsom said the $54.3 billion deficit is more than three times the size of the $16 billion set aside in the state’s Rainy Day Fund.

Protecting Public Health, Public Safety, and Public Education

The May revision proposes $44.9 billion in General Fund support for schools and community colleges and $6 billion in additional federal funds to supplement state funding.

It also prioritizes $4.4 billion in federal funding to address learning loss that was brought on by the COVID-19 school closures. These funds are expected to be used to make necessary modifications so that schools are prepared to reopen in the fall and help support parents' ability to work.

Supporting Californians Facing the Greatest Hardships

The new budget prioritizes funding for direct payments to families, children, seniors, and persons with disabilities. It will keep the Earned Income Tax Credit, which targets $1 billion in financial relief to working families whose annual incomes are below $30,000 – and including a $1,000 credit for those families with children under the age of six. It also estimates unemployment insurance benefits in 2020-21 will be $43.8 billion – 650% higher than the $5.8 billion estimated in the Governor's Budget.

State Government Savings

Negotiations will commence or continue with the state’s collective bargaining units to achieve reduced pay of approximately 10%. The May revision includes a provision to impose reductions if the state cannot reach an agreement. In addition, nearly all state operations will be reduced over the next two years, and nonessential contracts, purchases, and travel have already been suspended.

California's State Superintendent of Public Instruction, Tony Thurmond, issued the following statement on Thursday:

“The COVID-19 crisis has had a disastrous impact on the state’s economy, and the updated projections today offer sobering details of that reality. I want to thank Governor Newsom for working hard to prioritize and preserve public education as one of the vital, core services we must protect as we weather this economic downturn. Today’s updated budget proposal includes a variety of measures designed to avoid permanent cuts to education, which otherwise could have lasting impacts on a generation of students.

“While the measures outlined in today’s proposal are far from what our schools need, we also understand that our state is facing impossible choices under impossible circumstances. I will continue to advocate on behalf of our students and educators through each step of the Legislature’s budget adoption process in the coming weeks.

“We are grateful for the Governor’s proposal to direct $4.4 billion in federal aid to education, a move that recognizes the increased demands on schools and the equity issues and other challenges posed by COVID-19 school closures this spring. Schools are a critical driver of the health and vitality of our communities, and these funds can be used to make necessary modifications so that schools are better prepared to open their doors in the fall.

“We also strongly echo the Governor’s call for Congress to act swiftly and pass the HEROES Act, which will provide immediate financial relief and help us avoid many of the reductions proposed today. Now, more than ever, California needs support from the federal government so that our schools can deal with the unavoidable costs they face as they plan to reopen.

“I want to thank our educators, students, and families who have worked hard to keep learning going during this pandemic. These are extraordinary times, and we will get through this together. We must rise to this challenge and work together to keep services intact for our students as we navigate this crisis.”

The May revision can be seen in its entirety below.

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According to the CDC, coronavirus (COVID-19) is a family of viruses that is spreadable from person to person. Coronavirus is believed to have been first detected in a seafood market in Wuhan, China in December 2019. If someone is sick with coronavirus, the symptoms they may show include mild to severe respiratory illness, cough, and difficulty breathing.  

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Know how it spreads 

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  • And believed to be spread by respiratory droplets produced when an infected person coughs or sneezes 

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Protect others 

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You can find information on disinfecting and cleaning on the CDC's How to Protect Yourself page. 

The California Department of Public Health has issued guidance on the use of cloth face coverings to protect against the spread of the novel coronavirus COVID-19.  

The County of San Diego has made face coverings mandatory for those working with the public including grocery stores, pharmacies, gas stations, convenience stores, and similar businesses. 

While officials say these face coverings are not a substitute for practices like social distancing and handwashing, there is evidence to suggest that the use of cloth face coverings by the public during a pandemic could help reduce disease transmission. Officials do not recommend the public use N-95 or surgical masks which are needed by health care workers and first responders. 

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