CA officially in recession, budget cuts loom

The Sir Francis Drake Hotel in San Francisco's Union Square boarded up on Tuesday, March 24, 2020. Photo by Karl Mondon, Bay Area News Group

The good news: California has an $18 billion rainy day fund, the biggest in its history. The bad news: It’s likely gone, with cuts looming on the horizon.

“The pace of job losses that we are seeing in recent weeks … makes it clear that the economy has entered a recession, and possibly a quite severe one,” Legislative Analyst Gabe Petek said Thursday in the first legislative hearing since the coronavirus pandemic brought state government to a halt last month.

  • Petek: “It’s very likely that the state has gone from an anticipated surplus and is now likely facing a budget problem and potentially a significant one. Realistically, it will probably take several months for us to get a clear idea of the budget situation.”

Vivek Viswanathan, chief deputy director of Gov. Gavin Newsom’s Department of Finance, reiterated the uncertainty.

  • Viswanathan: “The number of times in which we may reply to you with, ‘We’ll get back to you on that with more information’ — that might happen a little bit more in this hearing than the prior committee hearings.”

But Viswanathan made clear that the $15.3 billion California is getting from the federal government’s stimulus package won’t be enough to patch the state’s financial hole — nor, for that matter, would the $1 trillion Newsom requested from Speaker of the House Nancy Pelosi for all state and local governments.

  • Viswanathan: “Even $1 trillion won’t be enough to avoid the hole we’re in, but it will help us minimize the most devastating cuts.”

Legislators have supported the governor’s rapid response to the crisis but are seeking some accountability through this hearing and another scheduled next week for the billions of dollars being rapidly spent.

Many answers remained elusive, including lawmakers’ demand for more information about Newsom’s nearly $1 billion deal for a monthly shipment of medical-grade masks. They demanded full details of the contract with a China-based vendor and requested a state website documenting California’s inventory of medical equipment but found themselves running up against a wall.

  • Christina Curry, chief deputy director of the Governor’s Office of Emergency Services: “The concern with providing all of that information publicly is… (personal protective equipment) is very high value, highly desired, and it could potentially open up issues with questioning decisions or creating a process outside of what we have.”

The Bottom Line: As of 11 p.m. Thursday night, California had 28,156 confirmed coronavirus cases and 973 deaths from the virus, according to a Los Angeles Times tracker. (These numbers are different from those of the state Department of Public Health, which are updated less often.)

Also: CalMatters is tracking, by county, positive and suspected cases of COVID-19 patients hospitalized throughout the state. We’re also tracking the state’s daily actions. And we have an explainer for everything you need to know about California’s response to coronavirus.

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