State Budget Deficit Must Not Lead to Core Service Cuts; Illuminates Need for Federal Action; Time for Republicans in California Delegation to Step Up

SACRAMENTO—The California Department of Finance today released data showing that the international economic decline from the COVID-19 pandemic has resulted in a projected $54.3 billion state budget deficit in California. 

That figure includes revenue declines triggered by necessary business closures to protect public health, health and human services caseload increases as a result of lay-offs and other impacts of COVID.

States are not allowed by law to borrow or maintain deficits. The federal government can borrow and run debt and has the ability to bail out state and local governments to avoid economic collapse.

 U.S House Speaker Nancy Pelosi has proposed a $2-trillion federal bailout package that would include significant help for state and local governments. The package is experiencing strong resistance from Republicans in the House and Senate.

 Statement of Kathryn Phillips, Director of Sierra Club California:

"It’s essential that California’s budget deficit not be solved by cutting core services to Californians who are suffering the most from the economic depression. This depression has already highlighted inequities in our economy. The worst thing state leaders could do would be to increase those inequities through core services cuts.

“This deficit also highlights how important it is that the only government entity that can borrow—the federal government—move quickly to do so and provide budget help to state and local governments. Without that help, the country will sink into a depression, just as it did after the 1929 stock market decline when an inept president who refused to help was in power.

“The biggest barrier to help right now are Republican members in the U.S. House and Senate. It’s time for Republicans in California’s delegation to step up and help their home state and their constituents. They need to support funds to keep California afloat.”