SACRAMENTO — Capping a hectic stretch of negotiations shortened and complicated by the coronavirus pandemic, Governor Gavin Newsom announced a California budget deal with lawmakers Monday to patch the state’s shattered finances.
“The COVID-19 global pandemic has caused a sudden and dramatic change in our nation’s and state’s economic outlook — and has had a cascading effect on our state budget,” Newsom said in a joint statement with the leaders of the state Senate and Assembly.
“In the face of these challenges, we have agreed on a budget that is balanced, responsible and protects core services — education, health care, social safety net and emergency preparedness and response. This budget also invests in California small businesses harmed by the pandemic.,” the statement read.
The announcement comes one week after the Legislature sent the Democratic governor a placeholder budget in order to meet a constitutional deadline. Lawmakers defended their version as more compassionate and flexible than Newsom’s.
Newsom proposed a revised budget in May that called for 10% cuts to state workers along with across-the-board cuts in areas like education and social programs.
The lawmakers’ version varied widely from Newsom’s proposal as they hoped to fill a predicted $54 billion deficit with less severe cuts and heavier reliance on payment deferrals and state reserves.
Monday’s deal is a shell of the ambitious spending plan Newsom introduced on a January morning when most of the world had never heard the word “Covid-19.”
With no reason to assume the state’s $3 trillion economy would be on the brink of collapse, Newsom at the time called for expanding the state’s role in attacking a number of vexing issues, including wildfires, the housing shortage, and the ever-escalating homelessness crisis. He also included money to expand medical coverage to undocumented immigrants, over $500 million to help for a minimum wage increase and asked voters to pass a $4 billion bond to fight climate change.
Five months later, the budget-busting pandemic and an monthslong statewide lockdown have combined to torch Newsom’s vision, halt 118 months of consecutive job growth and jeopardize the record surplus Newsom inherited in 2019.
“To be clear, this budget required some tough decisions and more work remains ahead. But they were necessary steps for keeping California on firm fiscal footing while we continue to meet the Covid-19 challenge, protect vital services and our most vulnerable communities, and build a strong fiscal bridge to a safe, speedy economic resurgence,” said Newsom.
The governor, Senate President Toni Atkins and Assembly Speaker Anthony Rendon didn’t immediately provide any details regarding the deal. Newsom has until the end of the month to make any additional changes and ink the 2020-2021 spending plan.
This is a developing story.
— By Nick Cahill