California Governor Gavin Newsom announced on Friday that the state’s budget deficit has grown to nearly $32 billion due to the ongoing economic impact of the COVID-19 pandemic. The news is likely to trigger cuts to state spending and services, as California is constitutionally required to have a balanced budget.
The governor said the state’s fiscal woes are due to declining revenues, including tax collections from businesses and personal income tax, and increased spending on healthcare and safety-net programs. In addition, the state’s unemployment rate remains high, and many businesses are struggling to stay afloat.
“The state faces a budget shortfall of historic proportions,” Newsom said during a press conference. “We are going to have to make some very difficult decisions in the coming weeks.”
Newsom’s announcement comes as the state prepares to release its revised budget proposal on May 14. The governor is expected to outline a series of budget cuts and revenue-generating measures to address the deficit.
The budget crisis is likely to have far-reaching impacts on state programs and services. California has one of the largest public education systems in the country, and K-12 schools are likely to face significant funding cuts. The state’s healthcare programs, including Medicaid, could also see reductions.
Newsom has called on the federal government to provide more aid to states and cities impacted by the pandemic. The state has already received billions of dollars in federal funding, but Newsom has argued that it is not enough to cover the state’s budget shortfall.
The governor also urged Californians to continue practicing social distancing and following other public health guidelines to slow the spread of the virus. He said that a surge in new cases could further strain the state’s budget and lead to even deeper spending cuts.
“This is not a permanent state, but it is a very difficult state,” Newsom said. “We will get through it, but we need to do it together.”