Facing ‘unprecedented’ economic challenges, California and 4 other states request $1 trillion in federal relief

California

As efforts to combat the coronavirus plunges California into a multibillion dollar budget deficit, leaders from the state and several others in the Western States Pact have jointly requested $1 trillion in relief from the federal government, California Gov. Gavin Newsom announced Monday.

California, Colorado, Oregon, Nevada and Washington all requested the relief, which will be used for public health, safety and education services, and to “help people get back to work.”

The letter addressed to House Speaker Nancy Pelosi, Senate Majority Leader Mitch McConnell and Sen. Chuck Schumer says the states will be forced to make “deep cuts” to government programs if they don’t get the relief.

“It is now clear that COVID-19 will be with us for the foreseeable future, and the worst of its economic impact is yet to come,” the letter read. “Our states are on the front line against the virus while at the same time leading our states’ recovery.”

For California, after a 10-year streak of economic growth, the pandemic demolishes hopes of a previously projected $21.4 billion budget surplus.

As the virus spread through the state, people hunkered down at home, businesses closed their doors, millions lost their jobs and state officials were left scrambling to expand hospital capacity, shelter the homeless, bring in more medical staff and buy coronavirus testing kits and personal protective equipment by the millions.

It threw California into what Newsom has described as a “pandemic-induced recession.”

And with the enormous losses in tax revenue going hand-in-hand with a growing need for social services, the state projects a $54.3-billion budget deficit through next summer — the biggest in its history, the Los Angeles Times reported.

“It was just a number of months ago that California was announcing a projected a $6 billion budget surplus,” the governor said in a news conference Monday. “… We now are struggling with tens of billions of dollars budget deficits.”

Newsom said that 4.5 million Californians have filed for unemployment insurance and Pandemic Unemployment Assistance since March 12.

The state has distributed $13.1 billion to out-of-work residents, he said.

“With unemployment projected to surpass that of the Great Recession, we are facing unprecedented and ongoing economic challenges,” the letter from the states read.

The leaders say that without the federal relief, the states will be forced to decide on whether to fund critical public health care or prevent layoffs of teachers, firefighters, police officers and other first responders.

The relief is also needed so the states can continue to provide help for small businesses and those looking for jobs, they said.

“Though even this amount will not replace the decline in revenue that we forecast, it will make a meaningful difference in our ability to make-up for COVID-19 revenue losses,” the leaders said in the letter.

Even as the state slowly moves toward reopening its economy, the number of cases confirmed statewide each week hasn’t been declining.

There were 68,221 known COVID-19 cases and 2,724 deaths attributed to the respiratory illness as of Monday, according to a Times tally.

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