Gavin Newsom says California needs more federal money to avoid deep cuts. What are the chances?
California’s financially beleaguered state government could receive an estimated $51 billion in federal aid over the next 12 months under a plan due for a House vote Friday.
It’s money that Gov. Gavin Newsom said Thursday is crucial to avoiding severe budget cuts. He unveiled a budget that says if the federal aid is sufficient, California could avoid about $14 billion in cuts, notably to public safety and schools.
“If the federal government does what it must do under the circumstances to help states large and small all across this nation, then these cuts would go away,” he told a news conference.
He had strong praise for House Speaker Nancy Pelosi, D-California, who’s leading the fight for the legislation. It was written by House Democrats and is expected to pass the Democratic-run chamber.
The number could change dramatically because the amount of aid partly depends on the rate of unemployment and the number of COVID-19 cases in the state.
The aid would go a long way in filling the budget deficit gap Newsom anticipates next year as he proposes a revised $203.3 billion budget for the fiscal year that starts July 1.
But the House aid plan, contained in a $3 trillion coronavirus relief package, is likely to go nowhere in the Republican-controlled Senate, where Majority Leader Mitch McConnell called it “exactly the wrong approach.”
Some sort of aid package is ultimately expected, though Senate leaders have said they’re in no rush to act. There are believed to be enough Republicans whose states are clamoring for some sort of federal help, and President Donald Trump has been open to the idea of more aid.
Newsom said he was well aware of the politics. Though he strongly endorsed the House Democratic plan, he added, “Everything is negotiable. I’m not naive about that.”
Governors ask for $500 billion
In the Senate, as the National Governors Association urged a $500 billion aid package, Sens. Bill Cassidy, a Louisiana Republican, and Bob Menendez, a New Jersey Democrat, offered a plan to provide that money.
Cassidy noted that Louisiana’s Revenue Estimating Committee saw the state suffering revenue and employment losses even worse than it endured from Hurricane Katrina in 2005.
“Even after the economy reopens, there’s no way for Louisiana to regain this revenue,” Cassidy said. “The report shows how important it is for Congress to pass my state and local funding bill.”
McConnell himself told Fox News Radio recently that “there probably will be another state and local funding bill,” adding “We need to make sure that we achieve something that will go beyond simply sending out money.”
He has said that a new package has to be tied to legislation that would provide protection for business owners, health care workers and others from what he called frivolous lawsuits that “could follow the actual pandemic and crush our recovery before it begins.”
In a Senate floor speech Tuesday, the Kentucky Republican talked about “a legal liability minefield getting in the way of reopening.”
As a result, he said, “the Senate’s going to act” on the issue as Senate Republicans prepare a package of coronavirus-related liability reforms for businesses and others.
How much for California?
Newsom first proposed a $1 trillion national aid plan a month ago. The House bill would spend $875 billion on state and local aid aimed at helping governments make up for lost revenue.
Here’s how California’s share could break down:
Money available 30 days after enactment ($21.4 billion):
▪ $1 billion from a fund divided equally among states and the District of Columbia.
▪ $2.4 billion based on the state’s share of COVID-19 cases. Currently, California’s 67,939 cases are 5 percent of the national total.
▪ $18 billion based on the state’s population. The U.S. population is currently 331 million. California has 39.5 million people, or 12 percent.
Money to be awarded by May 3, 2021 ($30.85 billion):
▪ $1 billion from the fund divided equally among the states and D.C.
▪ $29.85 billion based on the state’s share of unemployed people. In April, 23.1 million people nationwide were counted as unemployed. In California, the number was an estimated 3.5 million, or 15 percent.
Aid to local governments would be distributed using several different formulas, and the nonpartisan Tax Foundation estimates that California cities and counties could get $53 billion in guaranteed funding.
The money would be given in a way similar to that of the state funding.
Nationally, a total of $375 billion would be available. Within 30 days of enactment, $250 billion would be available, and the rest would be distributed within a year of enactment.
Counties, smaller and larger cities would be eligible. Counties would get funding depending on population, and states would get the smaller cities’ funding and distribute the funds based on population.
This story was originally published May 14, 2020 at 8:00 AM with the headline "Gavin Newsom says California needs more federal money to avoid deep cuts. What are the chances?."
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