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Abstract: 

This paper describes the impact of the COVID crisis on the California state budget during the calendar year 2020. It provides a brief overview of the budget process in California and identifies the different organizations that play a role. In January 2020, the economic outlook for the state was bright, and Governor Newsom presented a blueprint for the FY 2021 budget that proposed to expand a number of programs. By May that year, the state was facing a $54 billion budget gap brought about by the COVID recession. The legislature and governor eventually would agree on a budget that drew down almost $9 billion in reserves and effectively raised more than $4 billion in taxes on businesses and wealthier taxpayers. The budget also shelved plans for program expansions and identified $11 billion in cuts that would be triggered if more federal aid was not provided by October.

Keywords: California budget, COVID-19, state budgeting, state fiscal policy, recession

Affiliations:  1: Arnold Ventures.