Gov. Newsom, lawmakers agree on plan to close budget deficit

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Gavin Newsom

California Gov. Gavin Newsom gestures toward a chart showing the growth of the state’s rainy day fund as he discusses his proposed 2020-2021 state budget during a news conference in Sacramento, Calif., Friday, Jan. 10, 2020.. (AP Photo/Rich Pedroncelli)

SACRAMENTO, Calif. (AP) — Gov. Gavin Newsom and the Democratic state Legislature have agreed on a budget plan that would cover the state’s estimated $54.3 billion budget deficit, ending weeks of high-stakes negotiations amid a pandemic and protests over racial injustice.

No details were immediately available on the specifics of the agreement between Newsom and the legislative leaders. A joint statement from Newsom, Senate President Pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon said the agreement “protects core services — education, health care, social safety net and emergency preparedness and response.”

“This budget required some tough decisions and more work remains ahead,” the statement said. “But they were necessary steps for keeping California on firm fiscal footing while we continue to meet the COVID-19 challenge.”

In January, California leaders had been preparing for a multi-billion dollar budget surplus. But that changed in March when Newsom issued a statewide stay-at-home order that forced many businesses to close and put millions of people out of work.

The state’s unemployment rate was 16.3% in May — the highest since the Great Depression — and California has paid more than $30 billion in unemployment benefits since the start of the coronavirus pandemic. The governor’s office predicts California’s revenue will fall by $41 billion at the same time the state will need to spend billions of dollars more to respond to the virus and handle higher enrollment in government assistance programs like Medicaid.

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