California Governor: Expect Budget Gap in ‘Tens of Billions’
California Governor: Expect Budget Gap in ‘Tens of Billions’
(Bloomberg) -- California Governor Gavin Newsom said the economic slowdown caused by the coronavirus pandemic has left the state with a budget deficit that will reach into the “tens of billions” of dollars in the coming fiscal year.
Newsom, a first-term Democrat, is scheduled to revise his budget proposal by May 14 with the latest estimates on revenue and spending. In January, he proposed a $153 billion general-fund budget that increased spending by about 2% from the current year that ends June 30 and socked away about $5 billion more into rainy day funds.
“Last year I did a May revise with a $21.4 billion budget surplus,” Newsom said Friday during his daily briefing on the state’s response to the outbreak. “This year I will be doing a May revise looking at tens of billions of dollars in deficit. We just went tens of billions in surplus in just weeks to deficits.”
States across country have been forced to shut down broad swaths of the U.S. economy to stem the spread of the deadly coronavirus strain. Jobless claims reached 30 million since the pandemic began earlier this year and states and cities have said they’ll need at least $1 trillion in aid from the federal government to make up for the lost revenue.
“I’m doing everything I can to work with cities and counties, but we are not going to be in a position, even as the nation’s fifth-largest economy, to provide for the needs of all the cities and the counties without federal support.”
Newsom’s finance director in a Thursday memo ordered departments to cut spending immediately through such measures as bans on new goods and service contracts.
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