Newsom proposes deep cuts to address $54.3B shortfall

Gov. Gavin Newsom. Courtesy of the Office of the Governor

In delivering California’s revised budget, Gov. Gavin Newsom announced Thursday a proposal to cut spending on public schools and government services, and to reduce pay for state employees, as some of the ways to tackle its projected $54.3 billion shortfall. 

The plan aimed to close the budget gap brought forth by the effects of the COVID-19 pandemic was designed to preserve California’s values of protecting public health, public safety and public education, as well as provide aid to those struck by the pandemic the hardest, the governor said. 

The proposed $203 billion state budget represents a 5% decline in spending compared to that of the current year and $19 billion less than what was proposed in January, as the state faces unemployment claims from about 4.6 million Californians since March 12. This year’s unemployment rate is projected to be at 18% and personal income down by 9%.

“We are not arguing to solve a $54.3 billion shortfall overnight. We are looking not only at the current fiscal year, and next year’s budget year, but we’re looking at a multi-year strategy to work through this budget deficit,” said Newsom. 

California’s May budget revision includes canceling $6.1 billion in program spending increases and expansions, utilizing its $16 billion in rainy day funds through 2023, of which $8.8 billion is proposed for the upcoming year, and adding a temporary limit of $5 million to the number of credits taxpayers can use annually. 

Pay cuts for state employees

Newsom proposed a 10% pay cut for all state workers, including the governor and his office, starting July 1. The goal is to negotiate the cut with public employee unions but if a deal is not reached, furloughs would then be implemented. 

“I know this is the last thing that our partners want to hear, but unfortunately, we’re in a position where it’s required of all of us, and by the way, including me and including my entire staff,” said Newsom. 

Spending reduced for schools

The proposed revision includes decreased spending on K-12 education by just more than $6.8 billion for a total of nearly $48 billion in the upcoming year. General fund support for schools and community colleges is proposed at $44.9 billion. Newsom is relying on $4 billion in additional federal funds to supplement state funding. 

“These funds will be used by districts to run summer programs and other programs that address equity gaps that were widened during the school closures. These funds will also be used to make necessary modifications so that schools are prepared to reopen in the fall and help support parents’ ability to work,” read a news release from the governor’s office. 

Program expansions canceled

Newsom also touched on $6.1 billion in expanded programs and increases in one-time spending. Cutting these would eliminate the $112 million proposals to offer health care coverage to undocumented immigrants age 65 or older. 

California lawmakers now have until June 15 to decide on the proposed budget. 

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