Gov. Gavin Newsom releases revised state budget as unemployment reaches 'unprecedented' high

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Thursday, May 14, 2020
As revenues plummet, California budget cuts billions
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California Gov. Gavin Newsom is proposing to cut $6.1 billion from a variety of programs as part of next year's budget.

SAN FRANCISCO (KGO) -- Gov. Gavin Newsom released his revised May budget Thursday afternoon, estimating California will see "unprecedented" unemployment numbers reaching nearly 25 percent amid the COVID-19 pandemic.

California is facing a projected deficit of $54.3 billion.

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Newsom said the economic impact like this hasn't "been felt like this since the Great Depression."

4.6 million Californians have filed for unemployment since March 12, Newsom said.

"We are at a time that's simply unprecedented," he said.

During the Great Recession in the late 2000s, 2.2 million Californians were unemployed, with the peak in 2010.

To balance the shortfall, Newsom is proposing to cut $6.1 billion from a variety of programs as part of next year's budget.

He says the budget prioritizes public education, public health and public safety. Newsom's Thursday forecast estimates tax revenues will drop by about a quarter.

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Newsom plans to tap the state's $16 billion rainy day fund over three years.

After a record budget surplus that allow programs to grow, Newsom says it breaks his heart to have to make cuts.

Combined with money from two other funds, he's proposing using $8.8 billion in reserve funds for the 2020-2021 fiscal year.

The $203 billion budget proposed Thursday is about a 5% decrease from the current year's.

The budget proposal also includes a 10 percent pay cut for state workers to help with deficit.

He eliminated a proposal to provide health care coverage to immigrants over 65 living in the county illegally, which would've cost an estimated $112 million. He similarly seeks to cancel other plans for expanding Medicaid.

On schools, Newsom is relying on roughly $4 billion in federal coronavirus funding as one way to bring in more money.

During Thursday's announcement, Newsom called on President Donald Trump to sign House Speaker Nancy Pelosi's (D-California) HEROES Act, the $3 trillion relief package aimed at providing aid to Americans during the pandemic.

"What is the point of government if not to protect people, the safety, wellbeing of citizens," the governor said.

Newsom thanked Pelosi's efforts and called on federal lawmakers to endorse the HEROES Act.

"These are cuts that could be triggered and eliminated with the stroke of a pen. The President Of The United States could, with the stroke of a pen, could provide support for Speaker Pelosi's 'Heroes Act' and these cuts would be eliminated," Newsom said.

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House lawmakers are slated to vote on the bill on Friday.

Newsom's revised budget plan will also include more than $200 million to increase the state's firefighting efforts.

That money will be used to manage a surge in wildfires California has seen this year and hire 600 new seasonal firefighters.

The revised budget also includes a $133.9 billion general fund budget with a $203.3 billion overall budget.

The Associated Press contributed to this report

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