Gov. Gavin Newsom has signed the California budget, closing an estimated $54.3 billion deficit, much of it due to the coronavirus pandemic.
The $202.1 billion spending plan temporarily raises taxes on businesses, pulls heavily from the state's primary savings account and cuts more than $11 billion from state programs. But, the budget mostly avoids widespread cuts to public education and health care programs, instead delaying payments to future years and borrowing from internal funds.
Gov. Newsom called the budget "responsible" in the face of a pandemic. Republican legislative leaders said the plan will only make it more difficult to balance budgets in the future.
"In the face of a global pandemic that has also caused a recession across the world and here in California, our state has passed a budget that is balanced, responsible and protects public safety and health, education, and services to Californians facing the greatest hardships," Gov. Newsom said in a news release. "I thank Pro Tem Atkins, Speaker Rendon and both houses of the Legislature for their continued partnership and leadership during this challenging moment in our state’s history."
The release goes on to say the budget "protects public education and supports Californians facing the greatest hardships - since the pandemic is having a disproportionate impact on lower-wage workers, communities of color, and is further exacerbating income inequality." The budget secures $5.7 billion for coronavirus response and marks a total of $5.3 billion "to mitigate learning loss and support the immediate needs of students and schools."
The governor initially proposed deep cuts to the budget in mid-May, proposing a $203.5 billion plan in overall spending that included canceling billions in program extensions, drawing from the state’s reserve, temporarily limiting tax credits and borrowing from special funds.
Before the pandemic, the state reported a $21.5 billion surplus and had saved $16.1 billion for a rainy day fund.
State officials remain hopeful further cuts can be avoided if Congress is able to pass another coronavirus relief bill or assist the states in other ways.