California governor declares budget emergency due to COVID-19 pandemic

California anticipates a $54.3-billion budget deficit due to costs and a drop in revenue linked to the pandemic.In addition, the state expects to spend more than projected in 2020 because of expenses related to the coronavirus pandemic of about $13 billion.

California Governor Gavin Newsom on Thursday declared a budget emergency in the most populous U.S. state, blaming expenses and the economic downturn caused by the COVID-19 pandemic.

Declaring a budget emergency allows the state to tap into its rainy day fund. California anticipates a $54.3-billion budget deficit due to costs and a drop in revenue linked to the pandemic. Under a deal reached with lawmakers, the state would use about $16 billion from the rainy day fund over the next three years to help right its budget, said H.D. Palmer, a spokesman for the governor's finance department.

The finance department has projected a 25.5% decline in personal income taxes collected by the state, and a 27% decline in sales taxes and a 23% drop in corporate taxes. In addition, the state expects to spend more than projected in 2020 because of expenses related to the coronavirus pandemic of about $13 billion.