02:12 - Source: CNN
Pelosi: Stimulus bill is a big price, but virus is a big problem
CNN  — 

California Gov. Gavin Newsom laid out a grim revised budget plan Thursday that would slash state funding for education and other programs to make up for a yawning shortfall due to the coronavirus pandemic – and pleaded for more federal assistance to stave off the deepest cuts.

Only a few months after announcing a $5.6 billion budget surplus, Newsom and state lawmakers are now contending with a $54.3 billion deficit that they must close before the next fiscal year starts on July 1.

Newsom, a Democrat, repeatedly asked Congress to send more aid to state governments, citing the $3 trillion relief package unveiled this week by House Speaker Nancy Pelosi, a California Democrat. The measure, dubbed the Heroes Act, contains $500 billion in state support and $375 billion for local governments.

“It’s not just the state of California and its governor that is making an announcement along these lines. It’s governors all across this country,” Newsom said. “Federal government, we need you. These cuts can be negated. They can be dismissed with your support.”

Local and state governments already received $150 billion in federal funding included in the $2 trillion coronavirus bill Congress passed in late March. But that money can be used only for expenses incurred to fight the pandemic, not for other budget gaps.

States are contending with major tax-revenue shortfalls after stay-at-home orders crippled the economy across the US. Deficits could total $650 billion over three years, according to an estimate from the Center on Budget and Policy Priorities, a left-leaning think tank.

These budget gaps are forcing states to look at laying off workers and cutting funding for education, public colleges, health and human services, parks and recreation, and even public safety.

In Ohio, Republican Gov. Mike DeWine said earlier this month that the state will slash $210 million from Medicaid, $300 million from K-12 education and $110 million from higher education to help close an estimated $777 million shortfall.

California’s tax revenues are projected to decline more than 22%. The state estimates that unemployment will peak at nearly 25%.

The $203 billion budget proposal contains $14 billion in spending cuts – including a 10% reduction in state workers’ salaries and in higher education support – that would automatically be eliminated if the federal government provides more relief. Newsom would also use part of the state’s record $16 billion rainy day fund to offset some of the downsizing.