California expects $54.3B deficit, industry measures ahead of reopening

Gov. Gavin Newsom

With a nationwide recession brought forth by the coronavirus pandemic, California is projecting a $54.3 billion deficit over the next year and an unemployment rate higher than during the Great Recession, but Gov. Gavin Newsom said Thursday the state is well-positioned to deal with the challenge. 

“We’re better positioned to deal with this shortfall than we have shortfalls in the past. We’ll get through it by working together — a collaborative spirit of shared responsibility,” said Newsom during his daily briefing. 

A revised state budget, released Thursday by the Department of Finance, compared the projections to the pre-pandemic budget in January when Newsom’s office estimated a $5.6 billion surplus and a record level of reserves at $21 billion for its proposed $222 billion budget. 

The May revision reflects continued economic losses this year as a result of the pandemic, however. 

“The widespread economic interruption caused by the global pandemic is unprecedented in modern history,” read the Department of Finance’s fiscal update, adding that job losses and business closures will sharply reduce state revenues. The 2020 unemployment rate is expected to be 18%, which was higher than that during the Great Recession. Since mid-March, more than 4.2 million claims had been filed. 

The state’s general fund, which aids sectors in education, social services and public safety, will decline by $41.2 billion below the January projection.

Newsom called on the federal government to offer support for California and other states in need. 

“These revenue shortfalls are bigger than even the state of California. We need the federal government to recognize this because at the end of the day it’s not about our state. It’s about our firefighters. It’s about our nurses. It’s about our teachers, it’s about front-line employees that we call heroes every single day for good reason,” he said. 

A complete revised budget is expected to be released on May 14. 

Entering stage 2 of reopening California

Newsom and Dr. Mark Ghaly, the state’s Health and Human Services secretary, offered industry guidance to reduce the risk of spreading the virus. 

Businesses allowed to reopen Friday under the state’s second phase, such as retailers, manufacturers and warehouses, should take a series of safety measures. 

Before reopening, all facilities should:

  • Perform a detailed risk assessment and implement a site-specific protection plan. 
  • Train employees on how to limit the spread of COVID-19, including how to screen themselves for symptoms and stay home if they have them. 
  • Implement individual control measures and screenings.
  • Implement disinfecting protocols.
  • Implement physical distancing guidance.

Businesses should also consider increasing pickup and delivery service options, installing hands-free devices, if possible, shut down break rooms and increase the distance between workers, minimize transaction time between warehouse employees and other personnel and frequently clean delivery vehicles and equipment. 

No set date, but coming soon: 

Additional industries that could soon reopen, although officials did not provide an estimated date, include shopping malls, offices with physical distancing and encouraged telework, outdoor museums and dining in at restaurants while practicing the recommended distancing measures.

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