Gov. Gavin Newsom signed a $202.1 billion state budget Monday that largely avoids widespread cuts to public services to close a multibillion-dollar deficit caused by the coronavirus pandemic.
The budget, which takes effect July 1, maintains spending on schools and health and safety net programs by tapping reserve accounts, borrowing from special funds, delaying billions of dollars in payments until future years and temporarily limiting corporate tax credits to raise new revenue.
Some programs are nevertheless hit with steep reductions, including public universities, the court system, affordable-housing grants and state worker compensation. State officials hope to reverse $11 billion of those cuts if California receives a federal bailout by Oct. 15.
“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,” Newsom said in a statement.
The budget Newsom signed is about 9% smaller than the spending plan he proposed in January, which would have been a record. As the coronavirus forced Californians into their homes this spring, much of the economy ground to a halt and tax revenue dried up.
Facing a projected $54.3 billion deficit, the governor dropped some of the liberal priorities he wanted to adopt this year, such as an expansion of the state’s health care program for the poor to undocumented immigrant seniors. But in extended negotiations with legislative leaders, he agreed to forgo more extensive cuts he originally proposed to close the budget gap, including the elimination of a program to keep seniors out of nursing homes.
As the economic consequences of the pandemic become clearer, lawmakers will likely amend this budget. That could happen as soon as August, when the Legislature reconvenes after its summer recess with a more accurate sense of how much the state has collected in taxes. The deadline for filing taxes was pushed back by three months, to July 15.