California Governor Slashes Budget in COVID-19 Economic Crisis

California would slash spending on education and cancel plans to expand healthcare under a revised budget proposed on Thursday by Governor 👤Gavin Newsom as coronavirus-related woes thrash the world’s fifth-largest economy.

Newsom, a Democrat, cut his proposed budget for the next fiscal year by $19 billion from his original proposal in January, bringing spending below even current fiscal-year levels.

The revised budget would cut funding for public schools and universities, environmental protection and natural resource management, and dramatically scale back programs planned when the state was flush with cash just a few months ago.

State employees will be asked to accept pay cuts of 10%, and agencies will be expected to increase efficiency by 5%, Newsom told a news conference in the state capital, Sacramento.

The proposal, which must be approved by the Democratic-controlled state legislature, is meant to help close a $54 billion gap in spending over two fiscal years – the current year as well as the one beginning July 1.

“We are at a time that is simply unprecedented,” Newsom said.

Newsom started out in January with big ideas, recommending in a proposed $222 billion budget for the next fiscal year that the state set up its own generic drug label, expand public preschools, combat homelessness, and spend more on education from elementary school to college.

But the coronavirus has severely weakened California’s once-robust economy, wiping out billions in anticipated revenue from taxes on income and sales and leaving the most-populous U.S. state with a predicted 18% unemployment rate for 2020.

A fiscal update prepared by Newsom’s Department of Finance last week showed that 4.2 million people had filed unemployment claims since mid-March, when businesses began closing down under public health restrictions aimed at slowing the spread of the virus.