May 14 (UPI) -- California Gov. Gavin Newsom has slashed billions from the state's budget to offset the economic shortfall caused by the coronavirus pandemic.
During a press conference Thursday, Newsom announced he submitted his May revision budget proposal to the Legislature containing cuts, canceled spending and tax increases to cover the $54.3 billion deficit caused by declines in tax revenue and higher demand for social safety net services amid climbing unemployment as all but essential workers have been ordered to stay home to stop the spread of the coronavirus.
"We have been making historic investments in the last many years in the state of California and now being forced back into this position where we are having to make cuts breaks my heart," he said. "Because one thing I know about cuts is there's a human being behind every single number, behind every category is a dream that is either deferred, in some cases is denied."
To cover the deficit, 16 percent will come from three reserves, 15 percent from pulling back on investments, 15 percent will come from the federal government's more than $2 trillion relief package, 19 percent from deferrals and the rest will come from increased taxes and cuts.
According to the new plan, some $6 billion will be cut from program expansions and state workers will have their pay cut by 10 percent while some businesses will have tax deductions removed to generate lost revenue and $16 billion from the state's rainy day fund will go to paying down the deficit.
California, the world's fifth-largest economy, was the first state to issue a stay-at-home order in mid-March causing the unemployment rate for the year to be projected at 18 percent, he said, with more than 4 million unemployment claims being filed since the order was issued.
"COVID-19 has caused California and economies across the country to confront a steep and unprecedented economic crisis -- facing massive job losses and revenue shortfall," Newsom said in a statement. "Our budget today reflects that emergency."