Governor’s May Budget Revision Contains Major Cuts in Response to COVID-19 Recession
May 15, 2020
In a normal year, the May Revision is a chance for the Governor to make relatively minor revisions to his budget proposals based on April income tax revenues and public reaction to his earlier proposals. But this is not a normal year, and the May Revision released by the Governor yesterday reflects that by putting forth an entirely different set of proposals than we saw in January. CSAC’s Legislative staff has produced its customary Budget Action Bulletin, analyzing the budget proposal through a California Counties lens.
For the first time in a decade, a Governor in California is proposing deep spending reductions, attempting to balance cuts against the desire to help those most in need and prime the state for as quick and robust a recovery as possible. For counties, four of the major proposals include:
- Juvenile Offenders: While previous proposals would have shifted the state Division of Juvenile Justice (DJJ) to the Health and Human Services Agency, the May Revision proposes eliminating DJJ and realigning responsibility for those youthful offenders to county probation departments. A portion of the state savings from closing DJJ facilities, as well as $2.4 million in competitive grants, will be allocated to counties to cover new costs.
- CARES Act: The Revision would distribute $1.3 billion to all counties from the Coronavirus Relief Fund, part of the federal CARES Act. Cities with populations over 300,000 will receive funding directly from the state, while smaller cities will be provided funding through their counties. Funding may only be used to combat COVID-19 costs, and may not be used to backfill lost revenue.
- Project Roomkey: Given that the state is not in a fiscal position to expand programs, the new California Access to Housing Act proposal replaces $750 million General Fund with an equal amount of Federal Cares Act funding. The new proposal directs the use of these funds to purchase hotels and motels secured through Project Roomkey.
- CalWORKs: The Governor proposes eliminating most of the funding for CalWORKs Subsidized Employment, which helps small businesses hire recently unemployed individuals. This reduction will not occur if sufficient federal funding is received.
The budget documents outline two tiers of budget solutions, with some—about $14 billion-worth—only going into effect if the federal government fails to provide sufficient additional funding, such as that contained in the HEROES Act, which the House of Representatives is scheduled to vote on today. Those conditional cuts would fall heavily on health programs, human services, schools, and state workers, who would see a 10 percent cut to their salaries.
The Legislature faces a constitutional deadline of June 15 to pass a balanced budget, although it’s likely they will have to make adjustments mid-year due to the income tax filing deadline being delayed to mid-July. This, on top of a compacted schedule of committee hearings and continuing struggles with holding open meetings at a safe distance, as well as a Governor who is still only in his second year on the job, will put a strain on policymakers. County officials’ personal calls to them to advocate for county priorities are more important than ever.