Earlier this year, Governor Newsom signed a State Budget Package that included $11.1 billion in reductions and deferrals in several programs due to budget shortfalls expected as a result of the pandemic.  As part of the agreement, the budget provided funding for restoration of those reductions and deferrals if at least $14 billion in federal funds were received by October 15. Unfortunately, negotiations between Congress and the Trump Administration have yet to produce the necessary economic relief that would trigger either full or partial restoration of funding in accordance with California’s 2020 Budget Act.  On Thursday, the California Department of Finance confirmed the lack of adequate federal funding in a letter to the Joint Legislative Budget Committee.

The State Budget Package promised to “trigger up” funding if federal funds were received by the mid-October deadline. Of importance to counties was the promise of a funding increase of $250 million to support county realignment programs.  Additional restorations were to include:

  • $2.9 billion to reverse state employee payroll reductions
  • $970 million to be restored to the UC and CSU
  • $150 million to restore courts
  • $250 million to restore low-income and moderate-income housing reductions
  • $88 million to restore the reductions to Golden State Teacher Grant
  • $45 million to restore the cut to local child support programs

Despite the lack of additional federal funds, state tax receipts were better than expected through August.  The Legislative Analyst’s Office speculates this may be a result of less job loss among higher paid workers (who subsequently contribute a larger share of income tax receipts).  While higher tax receipts offer some positive news, without federal aid or further action by the State Legislature, the restorations hoped for in the 2020 Budget Act will not be forthcoming in the near future.

For a more detailed list of the programs dependent on additional federal stimulus funds, see here.