The State of California is projected to undergo a shocking $54.3 billion budget deficit over the course of the next two budget years due to the economic halt caused by coronavirus, a new estimate from California finance officials states.
The 2020-2021 two-year budget deficit rivals similar deficits during the early years of the Great Recession.
California’s Department of Finance on Thursday released new fiscal projections detailing a decline in revenue of $41.2 billion, with a 27.2 percent decline in sales and use tax revenues leading the way among General Fund revenues.
The deficit, which accounts for 37 percent of General Fund spending in 2019, also dwarfs California’s $16 billion Rainy Day reserve fund – established in the wake of the Great Recession – by three-and-a-half times.
The shortfalls also spell bad news for California’s K-12 and community college education systems, with the Department of Finance projecting a $18.3 billion cut to both under Proposition 98.
During a briefing on Thursday, Gov. Gavin Newsom stressed that weathering the pending economic storm would be possible, albeit with considerable Federal support.
“My optimism is conditioned on this — more federal support. We’re seeing economic numbers, unemployment numbers, more acute than anything we’ve seen in modern times,” he said. “We need the federal government to recognize this. We really need the federal government to do more.”