Governor Gavin Newsom and legislative leaders announced they had reached an agreement on how to close a cavernous $54 billion shortfall in the California state budget, after more than a month of negotiations.
In a press release, top state leaders say the deal “protects basic services – education, health care, social safety net and emergency preparedness and response”, although they did not provide details of expenditures.
Legislative sources who were not authorized to speak publicly about the deal say it avoids deep cuts to education, health and social services that Newsom had proposed in his May review. Instead, it would cut hundreds of millions of dollars in funding for some departments, defer about $12 billion in spending to K-12 schools and community colleges, and impose furloughs on state employees to save $2,000. An additional $8 billion if planned federal aid does not materialize.
For more than a month, the governor has been calling on Congress to pass a relief package for states and local governments grappling with the brunt of budget shortfalls from the pandemic and rising emergency spending.
Newsom, pro Tempore Senate Speaker Toni Atkins (D-San Diego) and Assembly Speaker Anthony Rendon (D-Lakewood) reinforced that demand in their budget announcement.
“It is imperative that our federal partners adopt a responsible and comprehensive relief plan so that states and local communities can continue to keep Americans safe while leading our national economic recovery,” their statement said.
Newsom and the lawmakers each listed about $14 billion in planned federal aid in their respective budgets. But if that doesn’t materialize, the state would cut hundreds of millions for state universities, courts and a handful of other areas in addition to education deferrals and furloughs.
Legislative sources say the final deal looks more like the interim budget lawmakers approved at their June 15 deadline than Newsom’s May review, with one caveat it doesn’t take as much money from the fund. rainy days lawmakers originally proposed, instead budget the roughly $20 billion in reserve funds over several years, as Newsom recommended.
The coronavirus pandemic has decimated state coffers, forcing Newsom to cancel more than $6 billion in new spending he announced in his initial budget proposal in January and look for other areas to cut.
The budget incorporates some savings from Medi-Cal and CalWorks, which are expected to have lower-than-expected workloads.
Although the agreement includes language to fund Medi-Cal for undocumented seniors, that program will not be funded until an unspecified future date. But in a bright spot for some of the state’s undocumented workers, the budget deal extends the earned income tax credit to those with children under the age of six.
While Newsom declined to provide many details of the budget deal during a coronavirus press conference on Monday, he said he intended to sign off on the budget, which has been in the works for weeks.
“It’s a tough budget for all of us,” Newsom said Friday of the negotiations. “The magnitude of the shortfall is unprecedented in the history of the state.”
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