California governor slashes budget in COVID-19 economic crisis


Reuters | California | Updated: 15-05-2020 02:13 IST | Created: 15-05-2020 01:56 IST
California governor slashes budget in COVID-19 economic crisis
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California Governor Gavin Newsom on Thursday slashed his proposed budget for the next fiscal year by $19 billion, bringing spending below 2019 levels as coronavirus-related woes thrash the world's fifth-largest economy. The revised budget would cut funding for public schools and universities, environmental protection and natural resource management, and dramatically scale back programs planned when the state was flush with cash just a few months ago.

State employees will be asked to accept pay cuts of 10%, and agencies will be expected to increase efficiency by 5%, Newsom, a Democrat, told a news conference in the state capital, Sacramento. The proposal, which must be approved by the Democratic-controlled state legislature, is meant to help close a $54 billion gap in spending over two fiscal years - the current year as well as one beginning July 1.

"We are at a time that is simply unprecedented," Newsom said. Newsom started out in January with big ideas, recommending in a proposed $222 billion budget for the fiscal year beginning July 1 that the state set up its own generic drug label, expand public preschools, combat homelessness, and spend more on education from elementary school to college.

But the coronavirus has severely weakened California's once-robust economy, wiping out billions in anticipated revenue from taxes on income and sales and leaving the most-populous U.S. state with a predicted 18% unemployment rate for 2020.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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