(Courtesy Photo)

Gavin Newsom and top Democrats have a California budget deal. Here’s what we know so far

By Sophia Bollag, Wes Venteicher, Hannah Wiley, and Kim Bojórquez

The Sacramento Bee

California schools and health care programs will escape many proposed cuts under a budget deal announced Monday that Gov. Gavin Newsom and legislative leaders say will close a projected $54 billion deficit.

Details about the deal struck Sunday night were still sparse Monday, and Newsom declined to get into specifics during a news conference, saying more information would be available “in the coming hours, days and throughout the week.” The ongoing COVID-19 pandemic made budget negotiations particularly difficult, he said.

“We made compromises across the spectrum,” he said. “It’s not just having to address revenue shortfalls, it’s also addressing increases in caseloads at the same time related to the economic consequences and the displacement associated with COVID-19.”

Some small businesses affected by the pandemic will be eligible for some new aid through the budget, Newsom said, although he did not provide specifics.

The pieces of legislation to enact the budget deal are expected to be made public early Tuesday morning around 2 a.m., a legislative source said.

Another budget source who declined to speak on the record said the agreement contains cuts to various sectors of the economy that could be reversed if the state receives $14 billion in federal funds that Newsom and other state leaders have been requesting.

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If those funds materialize, they will be used for K-12 schools and higher education, the judicial branch, housing, teacher training and state employee compensation, the source said. If the federal government provides less than $14 billion, the source said money will be divvied up proportionally based on the language in the actual bill, which has not yet been released.

The deal relies on existing federal money and delaying payments to avoid some cuts to schools, Newsom said. It also includes provisions to protect against teacher layoffs, although those provisions are not yet public.

“While this budget prevents the worst cuts in the short term, it still puts our students and our communities at risk,” Jeff Freitas, President of the California Federation of Teachers, said in a statement. “As teachers and classified professionals we will continue to demand the revenues our students need to succeed.”

Sources knowledgeable about the deal said the governor agreed to back off proposed cuts to programs that keep adults out of nursing homes and to Medi-Cal for elderly Californians. Advocates and lawmakers have argued that cuts to health care and programs to keep seniors in their homes could make the COVID-19 pandemic worse.

Anthony Wright, director of consumer advocacy group Health Access, said he was pleased that proposed cuts to those programs didn’t materialize, but was disappointed that the deal still has cuts to Medi-Cal provider rates scheduled a year from now and doesn’t include a plan passed by the Legislature last week to expand the program for low-income people to undocumented people over age 65. Although he said he hasn’t yet seen the budget deal in writing, he said his understanding is that the expansion, which lawmakers wanted to take effect in 2022, is being delayed indefinitely.

“We’re relieved that key cuts to health and other vital services were prevented, but we’re ultimately going to need state revenue to sustain these services over time,” Wright said.

The decision not to expand health care for undocumented seniors is particularly disheartening during the pandemic said Almas Sayeed, California Immigrant Policy Center campaigns and programs deputy director.

“We have the oldest undocumented community, and this proposal would have provided coverage for 27,000 people,” Sayeed said. “We’re disappointed.”

Newsom’s approach to state worker pay cuts won out in the budget deal, according to legislative sources.

Newsom proposed cutting state workers’ pay by 10 percent and suspending raises whether or not unions agreed to the cuts, which he expected would save about $3.6 billion.

Monday’s agreement gives Newsom the authority to impose two days of furloughs per month and to suspend raises scheduled for July 1.

Two of the state’s largest unions have already reached agreements with Newsom’s bargaining team that achieve roughly 10 percent in savings through furlough days and other mechanisms. The budget deal will add pressure on the rest of the unions to reach deals before the month ends.

The state worker pay cuts could be wholly or partly restored if California receives aid from the federal government.

Counties will get $750 million to fund social safety net services, a legislative source said. Additional federal money could free up another $250 million for the counties. The California State Association of Counties has advocated for $1 billion for local services.

About $550 million from a previous federal aid package is set aside in the budget deal to continue Project Roomkey, the Newsom administration’s program to house vulnerable homeless Californians in hotels and motels during the coronavirus pandemic.

In the final budget agreement, the governor also agreed to back off on his proposed cuts to childcare programs, Newsom’s office said last week.

Lawmakers approved a placeholder budget last week, the constitutional deadline. But the bill they passed represented agreement only among lawmakers, not with the governor. The budget they passed attempted to avoid or delay cuts, while Newsom had proposed a plan with more reductions.

Lawmakers will need to pass the latest version so that Newsom can sign it ahead of the July 1 start of the next fiscal year.

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