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    Balancing the State Budget During the COVID-19 Pandemic

    By Assemblymember Phil Ting–

    Compared to just a few months ago, our world is completely different. As Chair of the Assembly Budget Committee, I have written about all the good investments we, as a state, have made over the last several years, as California’s economy grew and unemployment remained at record lows, hovering below 4%. But that has dramatically changed.

    Since our state’s stay-at-home orders took effect in mid-March to slow the spread of COVID-19, we have seen over four million people apply for Unemployment Insurance, and the lines at food distribution sites grow. The jobless rate is estimated to jump to 18%. The recession we’ve been expecting is here.

    To prepare for this, I worked with then-Governor Jerry Brown to solidify California’s financial foundation. We took the lessons of the last downturn to heart by steadily putting money away, while also reducing debt. These crucial steps continued under Governor Newsom, balancing the need to build up savings with a desire to invest in our state and its people. Our efforts culminated in a rainy-day fund with $16.5 billion in reserve as of April 2020.

    That account has helped us respond to the COVID-19 emergency in real time. We bought masks and other protective equipment. Students on free lunch programs got food. Hotel rooms were secured for the homeless. Countless needs were addressed without having to pull funds from different programs and agencies.

    But no one could have predicted the severity of this crisis. The pandemic is projected to exhaust the rainy-day fund … and then some. California will quickly swing from surplus to deficit, due to decreased tax revenues and increased expenditures in response to COVID-19. Estimates show our budget shortfall will range between $31 and $54 billion. Unlike the federal government, our state cannot borrow money to cover deficits. 

    Unfortunately, this means all options are on the table to close the budget gap, making difficult decisions to balance potential cuts with new revenues. The situation really pains me. California has achieved so much over the last few budgets, opening opportunities for many communities: increased per-pupil spending in K–14 education, progress toward universal healthcare, expanded childcare subsidies so parents can work, additional funding for public universities, and financial aid for college students—and more. We also invested $10 million in HIV prevention programs, $1.1 million to renovate the Harvey Milk and Eagle plazas, and $250,000 for the Museum of LGBTQ History and Culture in San Francisco.

    We will fight to preserve these investments and have a better idea of our complete revenue picture after the new state tax deadline of July 15. New ideas to boost our coffers will be explored, such as a tax on vaping products and an economic stimulus bond to create green infrastructure and jobs. We also hope the federal government will continue to come through with aid. In fact, California has joined Nevada, Washington, Oregon, and Colorado in a Western States Pact, asking Washington, D.C., for $1 trillion in direct and flexible relief.

    We are working right now to pass a balanced state budget by the Constitutional deadline of June 15. Tough decisions lie ahead. At a time when people need government the most, its leaders will face constraints as we work to ensure no families are left behind in our recovery. But California is resilient, and I am confident we will rebound together.

    Phil Ting represents the 19th Assembly District, which includes the Westside of San Francisco along with the communities of Broadmoor, Colma, and Daly City.

    Published on May 20, 2020