Hoping for Federal Help, California Democrats Ease Drastic Cuts in Budget Deal

The California Capitol building.

(CN) — Democratic lawmakers in California struck a budget deal Wednesday, less than two weeks before the June 15 deadline to pass a balanced spending plan. 

The Legislature’s plan departs significantly from California Gavin Newsom’s proposed budget, meaning the two parties will have to hammer out their differences over the next couple of weeks to get a final spending package passed.

“We accept the assumption of an L-shaped recession,” said Assemblymember Phil Ting, a Democrat from San Francisco. “We anticipate there will be challenging fiscal times for several years.”

Ting said one of the major differences is the presence of trigger cuts, as lawmakers remain unclear as to whether the federal government will pass another stimulus bill that will infuse major funds into ailing states and local jurisdictions staring at large budget deficits. 

“There is a strong likelihood of federal funding and so we don’t want to do too many cuts,” Ting said. “We don’t want to overcorrect.”

The governor’s proposal contains $14 billion in cuts that would be foresworn if the federal stimulus comes in. 

The Legislature wants to ease cuts on education and human and health services, choosing instead to draw down reserves to the tune of $11.8 billion. 

Lawmakers, however, call for about $100 million in cuts to the state’s court system

The budget also restores legislative oversight of coronavirus-related spending after lawmakers delegated extraordinary authority to the governor at the outset of the public health crisis. 

The governor’s proposed budget called for the executive branch to have sole discretion where to allocate nearly $700 million in Covid-19 funds, but the Legislature said those funds should be disbursed through regular appropriations cycles. 

The state Senate and Assembly also rejected cuts to homeless services proposed by Newsom. 

“We are asking people to stay at home, so we thought we should have more money for homelessness and maintain an adequate safety net,” Ting said.

The Legislature also rejected cuts to higher education, although it did agree with the governor that creating an online community college at a time when all community colleges are and will be online for the foreseeable future is unnecessary. 

Another major departure from Newsom’s proposal involves the so-called “senior penalty,” which preserves laws that spare older Americans from paying more for state-funded health insurance. 

The budget put the brakes on plans to provide health insurance for undocumented workers until 2022, when budget revenues are predicted to begin to recover. 

Additionally, the Legislature calls for the closure of two state prisons and some adjustments to the cap-and-trade program. 

Ting and others cautioned the recovery process could be long and arduous. 

“Going forward there will be a deficit for a number of years,” Ting said during the press conference. 

But state Senate President Toni Atkins said the budget deal managed to forestall the direst effects. 

“Our economy has been pummeled by Covid-19, but thanks to a decade of pragmatic budgeting, we can avoid draconian cuts to education and critical programs, or broad middle-class tax increases,” Atkins said. 

Assembly Speaker Anthony Rendon said the state must preserve programs that are tailored to help Golden State residents who have been harmed the most by the pandemic and the ensuing economic effects. 

“The key budget goal is preserving programs serving those who are most vulnerable,” Rendon said. “Nevertheless, all the budget plans being discussed acknowledge the possibility that more difficult cuts will be necessary, due to Covid spending needs and weak revenues.”

Lawmakers must now negotiate with Newsom to get to a final version of the budget, which must be passed by June 15. It may prove to be difficult given the uncertainty surrounding possible federal stimulus. 

“We may have to do some revisions to this budget during the fiscal year,” Ting said. “Everything happened very suddenly and we are still adjusting to the Covid pandemic.”

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