California Proposes Billions in Cuts as Revenue Plunges

California Gov. Gavin Newsom proposed $14 billion in budget cuts on Thursday because of the coronavirus, with more than half coming at the expense of public schools already struggling to educate children from afar during a pandemic.The cuts are part of a plan to cover a $54.3 billion budget deficit caused by plummeting state revenues after a mandatory, statewide stay-at-home order forced most businesses to close and put more than 4.7 million people out of work.On Thursday, Newsom proposed filling that hole through a combination of cuts, tax increases, canceled spending, internal borrowing and tapping the state’s reserves. It also includes a 10 percent pay cut for all state workers, including the governor himself. Overall, the $203 billion spending plan is about 5 percent lower than the budget lawmakers approved last year.”Nothing breaks my heart more than having to make budget cuts,” he said. “There’s a human being behind every single number.”Aid package could helpNewsom said all of those cuts could be avoided if the federal government approves a $1 trillion aid package for state and local governments. The state would need that money before July 1 to avoid the cuts, a daunting task considering the partisan divide between Democrats who control the U.S. House of Representatives and the Republicans in charge of the U.S. Senate.”Depending on the federal government is not going to be a solution,” said Republican Sen. Jim Nielsen of Red Bluff.Public education, which accounts for 40 percent of all state general fund spending, was the hardest hit. School districts get money based on a formula outlined in the state constitution that is based on revenues, per capita personal income and school attendance.That guarantee dropped by $19 billion. But Newsom added a bunch of money to offset those losses. He wants to temporarily eliminate some business tax deductions to create $4.5 billion in new revenue. Plus, he wants to give school districts $4.4 billion from the federal Coronavirus Relief Fund. Even with those changes, schools are looking at a loss of $7.5 billion compared to the budget Newsom proposed in January.”They will be the single largest cuts public schools have ever had in California history,” said Kevin Gordon, a lobbyist who represents most public school districts. “Public school officials do not know where to start when it comes to trying to reopen with so much less money to work with.”$2.8 billion savings from pay cutThe 10 percent pay cut for the more than 233,000 state workers would save about $2.8 billion and includes firefighters and health care workers. The lowest-paid workers would still get planned raises, however, to bring them up to the state’s $15-per-hour minimum wage law.The pay cut proposal is just the starting point for a negotiation with public-sector labor unions. The Service Employees International, which represents about 96,000 state workers, plans to try to negotiate an alternative.”We could put our head in the sand and say, ‘Let’s take it,'” said Yvonne Walker, president of SEIU Local 1000. “But you know what, Local 1000? We’re not head-in-the-sand people.”Just four months ago, Newsom proposed a $222.2 billion spending plan that included a nearly $6 billion surplus and a host of new programs. Thursday, nearly all of that new spending disappeared. That included eliminating plans to give government-funded health insurance to low-income adults 65 and older living in the country illegally. And it cancels a plan to make more older adults eligible for Medicaid.”These potential cuts will be a body blow to the health care system we all rely on, at the very time we need it funded more than ever, in the middle of a pandemic,” said Anthony Wright, executive director of Health Access California, a statewide health care consumer advocacy group.Assembly Speaker Anthony Rendon called the state’s budget picture “grim” but said it was too soon to know which of Newsom’s proposed cuts his Democratic caucus would support. He said education and the social safety net must be priorities, and he, like Newsom, said the state needs the federal government’s help.”We have well-placed Republicans from California in Congress, and we’re going to obviously appeal to them and make sure they remember, obviously, where they got elected from,” Rendon said.$16 billion rainy day fundCalifornia’s financial downturn is cushioned by a $16 billion rainy day fund set aside during the good times. Newsom’s budget, which now must be negotiated with the state Legislature by June 15, calls for spending the rainy day fund down over the next three years, starting with roughly $8 billion in the upcoming year. He’s also tapping two other reserve funds for another $1 billion.The state would also spend more than $200 million to boost the state’s preparations for looming wildfires and other disasters, including hiring another 500 firefighters and 100 support personnel to help make up for the loss of dozens of inmate firefighters who were paroled to ease the risk of coronavirus outbreaks.State officials have furloughed state workers during previous budget deficits and used tricks like paying state employees a day later to save money. But Tim Edwards, president of the union representing state firefighters, said cuts to firefighters didn’t end up saving money because idled firefighters had to be backed up with replacements earning overtime.”Being one of the lowest-paid fire departments already in California (compared to metro fire departments), pay cuts would not go well for us,” said Edwards, president of CalFire Local 2881.  
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