California declares emergency to help balance state budget

ADAM BEAM

Associated Press

SACRAMENTO (AP) - Facing an estimated $54.3 billion shortfall, California Gov. Gavin Newsom on Thursday declared a "budget emergency" for the first time so the Legislature can pull from the state's savings account to balance a spending plan that includes cuts for colleges, courts and state worker salaries.

The move ensures the Legislature can take nearly $8 billion from the state's primary savings account to avoid even deeper spending cuts amid an economic downturn caused by the coronavirus and a subsequent stay-at-home order that has prompted more than 6.7 million Californians to file for unemployment benefits.

Newsom's declaration - required by law for lawmakers to raid what's known as the "rainy day fund"- is the final piece required to balance a $202.1 billion spending plan lawmakers are poised to approve this week. The state Senate has scheduled a vote Thursday night while the Assembly is set to approve the plan on Friday.

The budget is a complex package of 19 separate bills that direct spending on education, health care, housing, pensions, transportation and other services. The bills are supposed to only cover budgetary matters, but they often include some surprise policy proposals - including an effort this year by the Newsom administration to expand the state's assault weapons ban.

That proposal targets gun manufacturers' attempts to craft an assault-style weapon that gets around the state's ban. The Newsom administration says none of these guns are being sold in California right now but there is a pending lawsuit seeking to change that.

"We wanted to make sure these weapons aren't on the street. We think they are a public safety threat and we feel there is an urgency to act now," Aaron Edwards, who works in Newsom's Department of Finance, told lawmakers on Wednesday.

Republican state Sen. Jim Nielsen said it was a "breach of the public trust" to force through a change like that at the last minute, saying constituents should have been allowed to have an input.

With state revenues plummeting because of the economic downturn brought on by the coronavirus, Newsom proposed billions of dollars in cuts to public schools and health care programs to balance the budget. But the Democratic-controlled Legislature refused, opting instead to delay billions of dollars in expenses to future years - a tactic that saves money now but makes next year's budget more difficult to balance.

"Learning from lessons of the last recession, it's important that we don't cut programs that our residents rely more heavily on during economic downturns," said state Sen. Holly Mitchell, a Democrat from Los Angeles and chair of the Senate Budget and Fiscal Review Committee.

The budget also temporarily raises taxes on some businesses to generate $4.4 billion in additional revenue. And it borrows millions of dollars from restricted funds, including $30 million from a fund to respond to oil spills and $100 million from a fund that helps AIDS patients pay for their medication - although it would give the money back should the program run out of funds.

The spending plan cuts $150 million from the court system, $2.8 billion from employee salaries, $1.7 billion from public colleges and universities and $248 million from housing programs. But all of that money would be restored if the federal government sends the state at least $14 billion in additional aid by Oct. 15.

Lawmakers did find money for some new spending. For the first time, California will allow immigrants who don't have a social security number to be eligible for a credit that increases the size of their state tax refunds. But it only applies to people who have a child 5 and younger, leaving out hundreds of thousands of people who don't qualify.

Advocates have been working for years to expand the credit to immigrants, both those who live in the U.S. legally and illegally but who have jobs and pay taxes. Sasha Feldstein, economic justice policy manager for the California Immigrant Policy Center, said expanding the credit will help many but she was disappointed it won't include everyone.

"Our state is still settling for essentially incremental economic equity," she said.