Here’s how a $54 billion deficit will hurt Californians

May 07, 2020

CalMatters
By July Lin

California faces an unprecedented $54 billion deficit. Finance officials announce the unemployment rate could reach 18%, worse than the Great Recession. Schools, health care and safety-net programs face devastating cuts as state and local officials seek additional federal stimulus. 

California finance officials revealed a $54 billion deficit Thursday in the first economic assessment of the coronavirus pandemic’s devastating blow to the fifth-largest economy in the world.

That figure is higher than the deficit during the Great Recession and obliterates the state’s once-healthy reserves.

Without sugar-coating how hard the prolonged shutdown of businesses and job losses will hit the state, Gov. Gavin Newsom’s administration released bleak projections on key statewide indicators: 18% unemployment rate for the year, 21% drop in new housing permits and nearly 9% decline in California personal income. 

The California numbers signal a financial tsunami and cuts to schools, health care and safety-net programs, as state and local governments turn to the federal government for additional stimulus support. In one example, California’s public school system, including K-12 and community colleges, will lose $18 billion in the state’s minimum-funding guarantee, setting back years of striving to reach adequate education funding. 

Newsom stressed once again that California had balanced its budget and headed into this year with a huge surplus — all undone by the pandemic...

Lawmakers began to prioritize the programs they hope to protect. The Legislature will take up the budget after Newsom releases his proposal on May 14. Lawmakers will then have until June 15 to pass a balanced spending plan.

“I want to keep education as whole as possible,” Sen. Jerry Hill, a Democrat from San Mateo. Referring to deep cuts made during the last recession, he added, “we cannot abandon another generation of children.”

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