Governor's new California budget much leaner than January plan

California Gov. Gavin Newsom's newest budget plan cuts $19 billion of spending from the draft budget he released in January.

The revised budget totals $203.3 billion and includes $133.9 billion in general fund spending, $63.4 billion in special fund and $6 billion in bond fund. The budget Newsom introduced in January totaled $222.2 billion.

Bloomberg

"It goes without saying, these are not ordinary times," Newsom said Thursday. "I come to you with no notes and just four simple slides, which demonstrate where we are going."

Newsom began by painting a portrait of where the state was at in January with a $3 trillion economy and then drew a stark contrast with where the state is today as it experiences unemployment approaching 30%.

"That is a long-winded way of staying the state entered this in a strong fiscal condition and strong fiscal health," Newsom said. "We were prepared to make historic investments and to invest in our capacity to grow."

After outlining cuts to programs, including what he called an enhancement in January's budget that would have added additional people to the state's subsidized healthcare program, he announced that the state planned to spend down its $16.2 billion rainy day reserve over multiple years to help balance the budget.

He also put out a call to President Trump and California Republicans in Congress to support House Speaker Nancy Pelosi's HEROES legislation, saying it would help alleviate some of the cuts he proposed in the budget. Those cuts were set up with triggers, so that if the federal legislation passes the state can reinstate funding to the budget.

"We are required by the state constitution to pass a balanced budget," Newsom said. "We cannot print money like the federal government can."

The state’s Department of Finance announced in a three-page memo last week that the state was facing a $54.3 billion deficit. A day later, the state’s Legislative Analyst’s Office released a report that forecast potential deficits going out several years.

The DOF told the Legislature in March and state agencies that amid COVID-19 efforts, the governor would work off a “workload” budget that would freeze budgets at 2019 levels, but there could be more cuts required depending on how the revenue picture shook out.

The governor ordered the state’s residents to stay at home and shuttered all but essential businesses in mid-March. Working with several Western state governors, and advisors from business and former political leaders like former Gov. Jerry Brown, Newsom has been working on a plan to open the state on a limited basis.