Asked about declaring a budget emergency that would allow him to pull from the state’s $18 billion rainy day fund, Newsom admitted, “We will have to pull from our reserves,” before noting that “Our reserves are historically high.”
That may be so, but with the state now facing a projected $54 billion budget deficit from this year to next, those reserves will not come close to closing the gap.
Newsom hinted at hard cuts that are to come next month, noting “we are constitutionally bound” to balance the state budget, “by the end of June.”
The Governor said it is better to make those hard decisions on the front end rather than on the back end, when the pain is even more acute.
But, looking at revenue and unemployment, Newsom said the “work won’t end when we balance the budget.”
He noted the unemployment numbers released the federal government today — a high not seen since the Depression — “understate the unemployment in this country. Those numbers are lagging.”
His evidence? The California unemployment rolls have seen a jump of “4.3 million people just since March 12.” Add that to the — admittedly low — pre-pandemic employment number and, out of a workforce of 18 million people, “Do the math,” said Newsom.
“We’re not at 14.7 percent. State of CA is north of 20 percent right now.”
“It’s a very sober reality,” said the governor.