CALIFORNIA GOVERNOR'S REVISED BUDGET PROPOSES CUTS TO PUBLIC-SECTOR WORKER PAY, EDUCTION SPENDING

On May 14, California Gov. Gavin Newsom (D) submitted his proposed budget revision to the state Legislature. He has proposed several spending reductions, including cuts to public-sector salaries and education spending, in an effort to close an estimated $54 billion budget deficit. That deficit has resulted, in large part, from the effects of the COVID-19 outbreak.

How have budget projections changed? 

The May revision projects a $54 billion budget deficit: "Job losses and business closures are sharply reducing state revenues. Compared to the January forecast, General Fund revenues are projected to decline over $41 billion. This revenue drop, combined with increased costs in health and human services programs and the added costs to address COVID-19, leads to a projected budget deficit of approximately $54 billion before the changes proposed in the May revision."

Newsom's original budget proposal, released in January, called for approximately $222.2 billion in total state spending in the 2020-2021 fiscal year. Newsom's May revision calls for $203.3 billion in spending, an 8.5 percent decrease. January revenue projections totaled $211.9 billion. May revenue projections total $181.8 billion, a 14.2 percent decrease.  

Personal income tax revenue projections decreased 25.3 percent, from $105.3 billion in January to $78.7 billion in May. Sales and use tax revenue projections decreased 25.4 percent, from $41.0 billion to $30.6 billion.

What kinds of reductions are being proposed, and what are the reactions?

Newsom's proposal incorporates a 10 percent pay cut for California's 234,000 state employees: "Absent additional federal funds, the COVID-19 recession requires reductions necessary to balance the state budget. These reductions will be triggered off if the federal government provides sufficient funding to restore them. Savings in employee compensation will need to be part of the budget solution absent federal funds." Newsom said, "None of us in state government will be immune from tightening our belts and helping to support the cause and helping those most in need."

Assembly Speaker Anthony Rendon (D) said, "I want to make sure that we are not only respecting state workers, but collective bargaining. I am concerned about the 10 percent cut. You are looking at workers who are already suffering, so I am going to make sure we go through those details."

Yvonne Walker, president of SEIU Local 1000, which represents 96,000 public-sector workers, said, "I just want to be clear. It is not a straight across-the-board pay cut. If we do nothing, that's exactly what it comes to. But I have confidence in our bargaining team. I have confidence in our members."

The budget revision also estimates a $19 billion decrease in the Proposition 98 guarantee of minimum funding levels for K-12 schools and community colleges, a 23 percent decrease compared to Proposition 98 funding in the 2019-2020 fiscal year budget. Newsom has proposed implementing temporary tax changes, using federal COVID-19 relief and emergency education relief funds, and reducing employer pension contributions to mitigate the shortfall.

The Education Coalition, a group of nine statewide teachers unions and other K-12 education associations, opposed the proposed reductions: "[The] May revision proposes drastic cuts to K-12 education at a time when schools face significant costs related to COVID-19 and as they prepare for re-opening in the fall. It is for these reasons that the Education Coalition must respectfully oppose the proposed cuts in the May Revision to K-12 education and ask that both the Administration and the Legislature look to alternate revenue sources to ensure K-12 schools can provide quality and safe educational environments for its six million students."

In a statement on Newsom's budget revision, Assembly Minority Leader Marie Waldron (R) called on the governor to ease restrictions on individuals and businesses implemented in response to the COVID-19 outbreak: "The best way to fix this budget crisis is by helping people get back to work safely. If we can get employees back to work safely, receive some help from the federal government and make government more efficient to withstand future downturns, we will be able to protect jobs and public health and put California back on a path to prosperity that works for everyone."

What comes next? 

Newsom's proposal now goes before lawmakers, which must pass a balanced budget by June 15 or else forgo their salaries. California is a Democratic trifecta, with a Democratic governor and Democratic majorities in both chambers of the legislature.

WHAT WE'VE BEEN READING

• ABC Tulsa, "Teachers union sues DeVos, school district over special ed," May 20, 2020
• California Globe, "Public Education is Changing Forever," May 20, 2020
• Hartford Courant, "Unions and their legislative allies push back against spending cuts as Connecticut faces massive deficits," May 18, 2020
• Times Union, "Thousands of state workers are home, but no whisper of furloughs," May 16, 2020
• San Francisco Chronicle, "How Gavin Newsom plans to close California’s huge budget gap during coronavirus pandemic," May 14, 2020

THE BIG PICTURE

Number of relevant bills by state

Number of relevant bills by current legislative status

Number of relevant bills by partisan status of sponsor(s)

RECENT LEGISLATIVE ACTIONS

Below is a complete list of relevant legislative actions taken since our last issue.

• California SB1173: Existing law requires public employers to provide unions with contact information for all employees within the bargaining unit. Existing law also requires that public employers provide unions with contact information for new employees within 30 days of hire. This bill would impose liability on employers who violate these provisions 3 or more times in a 12-month period. 
  • Democratic sponsorship. 
  • Senate Labor, Public Employment, and Retirement Committee reported favorably on May 18. Re-referred to Appropriations Committee.

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