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Gov. Gavin Newsom Attempts To Fix California’s Huge Budget Hole

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Democratic California Gov. Gavin Newsom unveiled a revised state budget during a public appearance Thursday that addresses the social and economic impact of the coronavirus on the state.

Newsom’s initial budget in January proposed an ambitious $222 billion for the next fiscal year, including plans to expand public spending on education and combat homelessness, Reuters reported. However, the economic damage caused by the coronavirus and California’s statewide lockdown has forced Newsom to rework the budget. (RELATED: REPORT: Gov. Gavin Newsom To Close All California Beaches And State Parks)

A $5.6 billion dollar surplus turned into a $54.3 billion dollar deficit, and the state unemployment rate is expected to reach 18% despite being 3.9% only a few months prior. Newsom stated that California needed to “be ready for the effort” it takes to overcome the situation.

LOS ANGELES, CA - MARCH 27: California Governor Gavin Newsom speaks in front of the hospital ship USNS Mercy that arrived into the Port of Los Angeles on Friday, March 27, 2020, to provide relief for Southland hospitals overwhelmed by the coronavirus pandemic. Also attending the press conference were Director Mark Ghilarducci, Cal OES, left, Admiral John Gumbleton, United States Navy, right, and many others not shown including Mayor Eric Garcetti and Dr. Mark Ghaly, Secretary of Health and Human Services. (Photo by Carolyn Cole-Pool/Getty Images)

Governor Gavin Newsom at the Port of Los Angeles (Carolyn Cole-Pool/Getty Images)

A summary of the revised budget, released Thursday afternoon, states that it’s based on “the principle of prudent fiscal management” and aims to address public health and safety, education, small businesses, and economic recovery.

The challenge for Newsom is being able to meet the state’s constitutional obligation to enact a balanced budget. With a current fiscal deficit, Newsom will have to cancel many of the initiatives he proposed in January, borrow from financial reserves or special funds and raise taxes to increase revenue.

Even if all the components of the revised budget are enacted into law, the summary reports that the state’s structural deficit would still be around $16 billion by the 2023 fiscal year. It is yet unclear what the final budget will look like and how Newsom will enact policies that could draw the ire of California residents, such as tax hikes.

California’s disaster relief efforts have reflected partisan priorities in the past, such as when Newsom announced in April that $125 million in coronavirus assistance funds would go to illegal aliens. Newsom also worked with Democratic lawmakers in the state to create a disaster relief program specifically for illegal aliens living in California, a number that exceeds 2 million. These efforts were criticized by Republican lawmakers like state Sen. John Moorlach, who called a relief program for illegal aliens a “luxury item.”