The Ukiah Daily Journal

Schools, health facing deep cuts

Gov. Newsom must bridge the $54 billion deficit caused by the coronaviru­s

- By Laurel Rosenhall and Jackie Botts CALmatters

How does a liberal, blue-state governor take on the unappealin­g task of slashing the budget? By shifting a lot of the pressure to the federal government.

In revising California’s budget down to $203 billion Thursday, Gov. Gavin Newsom charted a plan to fill a huge deficit by tying many cuts to additional federal aid. If the feds come through with $1 trillion for state and local government­s that Newsom and other Democratic governors have requested, California would not reduce funding to schools, colleges, parks, child care, health care and other programs.

“The President of the United States, with a stroke of the pen, could provide support for Nancy Pelosi’s new HEROES Act and

these cuts could be eliminated,” Newsom said, as he presented his proposal to close a $54 billion deficit brought on by record job losses during the coronaviru­s pandemic.

It’s a strategic, if risky, course as Newsom heads into a sprint of budget negotiatio­ns with state lawmakers over the next four weeks.

On the one hand: Newsom’s proposed cuts will likely unleash an outpouring of advocacy from sympatheti­c constituen­cies including teachers, firefighte­rs and police that could influence decisions in the nation’s capital. Newsom enjoys longstandi­ng ties to House Speaker Nancy Pelosi, a fellow San Francisco Democrat whose father-inlaw was business partners with Newsom’s grandfathe­r. And despite feuds with Donald Trump that defined much of Newsom’s first year in office, he has developed a working relationsh­ip with the president. They have been publicly praising each other since the pandemic began.

On the other: GOP Senate leader Mitch McConnell has already rejected Pelosi’s latest aid package and previously said he wouldn’t support any “blue state bailouts.” Federal aid at the level Newsom would like — not to mention passage before cuts to the state budget would take effect on July 1 — is hardly a sure thing.

“We do need to have a Plan B,” said Assemblyma­n Phil Ting, a San Francisco Democrat who chairs the Assembly budget committee.

“I don’t think we should only rely on the federal government… If the federal money doesn’t come through, we should think about other options before we go to cuts.”

Ting’s counterpar­t in the state Senate sounded more optimistic that Congress would come through and that Newsom’s proposed cuts would not come to pass.

“The programs that he’s attached to the trigger hopefully will create a wonderful advocacy opportunit­y for beneficiar­ies of those programs to reach out to our congressio­nal representa­tives to make sure that the state gets the resources they need so we don’t have to cut those areas,” said state Sen. Holly Mitchell, a Los Angeles Democrat.

Indeed, within hours of Newsom’s announceme­nt, the California Teachers Associatio­n began asking California­ns to call their members of Congress and urge passage of Pelosi’s aid package.

Lawmakers will now sift through Newsom’s proposal before they must pass a budget on June 15. GOP Sen. Jim Nielsen of Tehama quickly rejected Newsom’s approach, saying “relying on federal bailouts is not a budget solution.”

But Republican­s make up just a quarter of the Legislatur­e, not a large enough bloc to be influentia­l in budget negotiatio­ns.

Most Democrats in the Legislatur­e today were elected since the last recession and now face their first bleak budget. Up until the coronaviru­s outbreak, California had enjoyed the longest economic recovery since the Great Recession. After raising taxes in 2012, the state managed its finances prudently in good years, paying off a $35 billion “wall of debt” from internal borrowing schemes and building up significan­t reserves — all of which helped improve the state’s credit rating.

Still, public employee pensions have since reported record losses. That has local officials fearful of service cuts, layoffs and even bankruptcy because state and local government­s are obligated to contribute more — even when they have less. CalPERS, for example, shed $69 billion as the global financial market recoiled from the pandemic.

And former Gov. Jerry Brown, a doomsayer who paddled right of many legislativ­e Democrats in seeking fiscal restraint throughout his second tenure, warned in his final state budget that the good times wouldn’t last forever.

“What’s out there is darkness, uncertaint­y, decline and recession,” Brown said in 2018. “So good luck, baby!”

The Newsom administra­tion projects 24.5% unemployme­nt, a 21% decline in new housing permits and a nearly 9% drop in California personal income for the fiscal year starting July 1. It’s a stark turnaround from January, when the governor laid out an ambitious agenda featuring a $5.6 billion surplus.

Newsom acknowledg­ed all of that has disappeare­d “in a blink of an eye” as he walked back many of his January proposals. The governor dropped a plan to extend Medi- Cal health coverage to low-income undocument­ed seniors over 65 — a move that could cause friction with legislativ­e Democrats hoping to support a community more vulnerable to the virus.

“Immigrants are the backbone of our state and have been serving as essential workers throughout this crisis,” Assemblywo­man Lorena Gonzalez, a San Diego Democrat, said in a statement. “We are disappoint­ed, but not surprised by the Governor’s actions to go backward on health for all.”

The crisis, however, may present opportunit­ies for Newsom. He had proposed closing one prison in the next five years. Now he wants to close two prisons, one in 2021 and another in 2022. That will likely put him in conflict with the prison guards union that has traditiona­lly wielded clout at the Capitol, but if Newsom is successful he would burnish his progressiv­e bona fides in any future political campaign.

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