California governor declares budget emergency due to COVID-19 pandemic

By Sharon Bernstein
SACRAMENTO, Calif. (Reuters) - California's governor Gavin Newsom declared a budget emergency in the most populous U.S. state on Thursday, blaming spending and the economic downturn caused by the COVID-19 pandemic.
By declaring a budgetary emergency, the state can use its rainy day fund. California expects a budget deficit of $ 54.3 billion due to costs and a decrease in pandemic-related revenues.
Under an agreement with the lawmaker, the state would use approximately $ 16 billion from the Regentag fund over the next three years to improve its budget, H.D. Palmer, a spokesman for the governor's finance department.
The finance department predicted a 25.5% drop in government income taxes, a 27% drop in sales taxes, and a 23% drop in corporate taxes.
In addition, the state expects to spend more in 2020 than it predicted from the $ 13 billion corona virus pandemic spending.
The government's budgetary crisis is overshadowed by coronavirus cases, which are increasing.
Nearly 5,350 people have tested positive for coronavirus in California in the last 24 hours, Newsom said. The increase was less than on Wednesday with 7,149 new cases. But the number of Californians who got very sick continued to increase, using about 34% of the state's available intensive care beds, compared to 29% on Wednesday.
A total of 4,240 patients were hospitalized with COVID-19 in the state on Thursday, using approximately 9% of the total available beds, Newsom said.
The growing number of cases has prompted the state to put eleven districts, which represent approximately half of the California population, on a watchlist of places that may be required to suppress recent efforts to reopen their economies.
Newsom praised the Walt Disney Co <DIS.N> on Thursday for postponing the planned reopening of state theme parks.

(Reporting by Sharon Bernstein, editing by Franklin Paul and Nick Zieminski)

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