CIMA Law Group has been monitoring California’s new budget from Governor Newsom on how to best handles its new deficit caused by COVID-19. The Governor of California, addressed California’s $54 billion dollar deficit and made it clear that large cuts will happen if California does not receive aid from the federal government. However many lawmakers and senate members see the governor’s plan as a “draconian budget cut” which would target safety net programs and K-14 schools funds. The governor introduced on May 14 a modified $203 billion blueprint that, among other cuts, shaves billions in public education funding and pulls more than $50 million from adult Medi-Cal services, including diabetes prevention programs and eye appointments. Many believe it will affect low-income Californians and the senate has made their own budget plan that will use the same framework, but have a key difference that would protect services for the homeless, seniors and sexual assault victims, health care services, immigrants, and child care for working families.
The Senate has a little bit more different agenda as many believe Governor Newsom plan is not empathetic towards low income Californians. The plan created by the senate is to use $8 billion in reserves and defers, transfers, or borrow an additional $9 billion which is anticipated to saving $3.6 billion dollars savings if the health and human services cases will not grow large. It will protect public school funding and Medi-Cal and as well rejects the administration’s plan to pull funding generated by a tobacco tax to pay Medi-Cal providers, and rejects cuts to services such as senior nutrition programs and child welfare services. However, both the governor and Senate will decide by June 15th on a new budgetary plan however the senate will have more room if the state could get money from Congress. However, if they do not receive aid from the federal government they would agree with a backup plan. The backup plan includes deferring $5.3 billion in the school’s funding and would approve cuts to a more narrow set of services. The back-up strategy would also delay $1 billion in payments by one day from June 30 to July 1 which was a strategy used in 2011 and 2012 during the last financial crisis to push spending into the next budget year.
California will be watched as it will handle balancing both the restructuring of its economy and the social and educational funds. The stakes are high as the time to decide will soon be approaching and whether the federal government will give aid to the state or the state must tread on its own in its recovery from deficits. Even with cuts there might be a middle ground the Senate and the Governor can stand together at that wont terribly hinder many of Californians and still provide the necessary funds to cut the deficit.
Sources: https://www.sacbee.com/news/politics-government/capitol-alert/article243063166.html
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